Higher dividends – despite the corona pandemic

The dividend season surprises investors positively. Although the German economy slumped by 5 percent last year, many stock corporations in this country are even distributing more than in the previous year.

The dividends of the Dax auto stocks are astonishingly solid.

NAfter a Dax record of 15,501.84 points at the beginning of the week, the previous week on the stock market was rather poor: Joe Biden’s plans for higher taxation of wealthy Americans weighed on the mood. The signals from the ECB on Thursday to keep its monetary policy expansionary only supported the index temporarily. But the apparent lack of interest is deceptive: “The ECB policy is very important for the development of the stock markets in the second half of 2021,” emphasizes Andreas Hürkamp, ​​DAX expert at Commerzbank. The valuation of many Dax shares is at a ten-year high: For BASF, investors pay 16 times the profits expected for 2021, for Siemens 22 times and for Linde even 31 times.

“The promise of the ECB not to react to the recent rise in inflation with a little expansionary monetary policy is a decisive driver for these high valuations,” said Hürkamp of the FAZ If the ECB had to rethink its very expansionary policy, this would, in his opinion, at least temporarily lead to a significant correction in the valuations for Dax shares.

Pleasing dividend season

Good news for investors nonetheless came from the dividend side: the dividend season for 2020 went better than expected, although the German economy slumped by 5 percent last year. 29 of the 30 DAX companies have now announced their dividends for 2020. The only company missing is Delivery Hero, with probably no dividend. As Commerzbank has put together, 16 companies have announced a higher dividend, while only five have cut their dividends. In total, the thirty companies will distribute almost 34 billion euros. The total dividend is even 1.2 percent above the previous year’s figure.

The biggest surprises came from the German automakers: The dividends of the Dax auto shares fell only slightly from 5.6 billion to 5.1 billion euros. The sector pays 15.1 percent of the total Dax dividends. The insurance industry overtook the auto sector by 15.7 percent.

The total dividend yield for the Dax is calculated to be 2.3 percent. It is 180 basis points above the yield on “BBB” euro corporate bonds (maturity five to seven years) and an impressive 260 basis points above the yield on ten-year Bunds.