Jul. 28--Cash is in short supply.

As the housing bubble burst and more borrowers missed payments, banks began pulling back on lending. The credit crunch fed on itself, buyers for certain types of securities evaporated, and money for corporate deals dried up.

Some investors responded by seeking companies that pay solid dividends.

Tom Wargin has done that. But he's also put money into a company with billions of dollars of cash in hand that pays no dividend at all.

"Warren Buffett is sitting on $35 billion in cash, which he can now use in an uncertain market, as he's recently shown by providing financing for the Mars buyout of Wrigley, and the Anheuser-Busch acquisition," said Wargin, portfolio manager at Liberty Financial Group Inc. in Elm Grove.

"And who better would you want to have investing your money in a down market?" he asked.

The trouble with down markets is the strong urge they provoke to just get out. While that may spare some downside, it's difficult to figure out when to get back in.

"You would need to have magic timing to know when the dust clears and when the market bottoms," Wargin said.

Absent such magic timing, he tries to find companies positioned to weather bad markets.

Among those that pay dividends is a local name.

Johnson Controls Inc. (JCI, $31.05), Glendale, markets automotive systems and building controls.

This company's stock has traded as high as $44.46 and as low as $26.00 during the last 52 weeks.

Wargin says he recently added to his longtime position in the company, which has been able to offset declining sales in its automotive supply area with profitable growth in its building-efficiency and hybrid-battery groups.

Johnson Controls has a decent dividend yield of 1.75%, and is one of the few companies that allows investors to bypass brokerage commissions by purchasing shares directly, Wargin said. Its average annual dividend growth rate for the five years ended June 30 has been 14.8%.

Berkshire Hathaway Inc. (BRK/B, $3770.00), Omaha, Neb., doesn't use any of its huge cash holdings to pay a dividend, but Chairman Warren Buffett has compounded its book value by more than 20% annually for more than 40 years.

"It's a holding for a nervous environment," he said. When they suspect rocky markets ahead, a lot of mutual funds and hedge funds sell out of more speculative holdings and buy Berkshire because they know it's one of the safest stocks out there, he said.

Berkshire Class B shares have traded as high as $5,059 and as low as $3,558 in the last 52 weeks. The price per share is so high because Buffet doesn't allow stock splits. He also says he doesn't pay a dividend because he believes he can deploy the company's hefty cash flow of about $1 billion a month better than most other investors.

"It's hard to find places to put your money that can match that kind of return," Wargin said.