Some investors expect the Berkshire's earnings momentum to grow with a recovering U.S. economy, regardless who is at the helm of the company.
Recent acquisitions such as BNSF Railways and Lubrizol and earning growth at MidAmerican Energy and Marmon Group give Berkshire investors ownership in strong performing assets, while a $90-billion-plus investing portfolio led by Coca-Cola (KO - Get Report), Wells Fargo Hathaway's (WFC - Get Report) and International Business Machines (IBM - Get Report) give shareholders leverage to economic recovery.
"Berkshire's conglomeration of companies is likely to outperform the Standard & Poor's 500 Index over the next 10 years," says William Smead, chief investment officer of Smead Capital. "If the company is growing at a compound annual rate of 15%, who cares if they pay a dividend," Smead says.
Berkshire's near 20% compounded annual book value growth since 1965, more than doubles the S&P 500 , and the firm's share price significantly outperform the index on just about every time horizon.Were an eventual successor to pay a dividend or significantly increase share buybacks, it will have an impact on markets given Buffett's penchant for acquisitions and his willingness to invest billions in emergency capital in the likes of Goldman Sachs (GS), General Electric (GE) and Bank of America (BAC).
A dividend or buyback increase would limit Berkshire's ability to cut large deals or quickly jump into multi-billion dollar investing opportunities, when they arise. "We think it is a very strong company from a credit perspective and it is going to remain a strong company through a management transition," Bruce Ballentine, a Vice President in Moody's Insurance team, said in an April interview. Few expect Berkshire to join Apple in the ranks of dividend paying stocks anytime soon. In fact, if Berkshire Hathaway's shares continue to outperform Google (GOOG) in 2013, Berkshire may end the year as the largest company in America by market cap without a dividend. -- Written by Antoine Gara in New York. Follow @antoinegara