Billion blessings for shareholders: record dividends from German companies

Stock corporations in Germany will pay dividends of around 75 billion euros to their shareholders this year – more than ever before. A share is particularly worthwhile for dividend hunters.

The shareholders of German stock exchange groups can hope for a record amount of dividends for the past financial year. The stock corporations in Germany want to pay out a total of around 75 billion euros to their shareholders this year – nine percent more than in the previous year. This is the result of calculations by the German Association for the Protection of Securities (DSW) and the isf Institute for Strategic Finance at the FOM University.

Above all, shareholders of the DAX companies benefit from the dividend blessing. The 40 corporations in the top German stock exchange league distribute an estimated 52.5 billion euros and thus contribute the lion’s share. According to the information provided, the three car manufacturers Mercedes-Benz, BMW and Volkswagen alone total around 15.5 billion euros.

Nobody pays as much as Hapag-Lloyd

But one company puts them all in the shade: the traditional shipping company Hapag-Lloyd is enthroned with a payout of 11.1 billion euros as the largest single payer. After container shipping was characterized by overcapacities and low margins for a long time before Corona, Hapag-Lloyd was able to benefit massively from the increased freight rates in the 2022 financial year and bring in a result of 17.5 billion euros that seems almost incredible.

The company, which is not listed in any index due to its low free float, intends to pay investors a record dividend of EUR 63 per share for the past financial year, almost doubling the figure for the previous year. The Hamburg billionaire Klaus-Michael Kühne alone, one of the richest Germans, collects 3.3 billion euros in dividends from Hapag-Lloyd. The city of Hamburg, another shareholder, can look forward to a rain of 1.5 billion euros.

Skepticism is appropriate for the 2024 dividend season

But can shareholders of German stock exchange groups also hope for record dividends in the coming year? The fact is: the positive dividend balance for the 2022 financial year is also being driven by strong one-off effects. Hapag-Lloyd alone accounts for almost 15 percent of the total distributions from German stock exchange groups.

However, experts warn that the “party” in container shipping is already over. There are clear signs of a slowdown in the container logistics market, and freight rates have fallen significantly. A fabulous result and thus a record dividend like this year should no longer be possible at Hapag-Lloyd in the future. This, in turn, should depress the entire dividend balance of listed German companies in the coming year.

Adidas drastically cuts dividend

In addition, the 2023 dividend season already reveals a downside if you take a closer look. The proportion of companies that distribute less than a third of their profits to shareholders is 40 percent this year – and thus higher than in the two previous years. “You obviously put things aside for worse times,” the study authors conclude.

If there were no dividend cuts at DAX companies in 2022, the automotive supplier Continental (minus 31.8 percent), the real estate group Vonovia (minus 48.8 percent) and the sporting goods manufacturer Adidas (minus 78.8 percent) steam their dividends to shareholders in 2023 a. There are even two complete failures this year with Covestro and Siemens Energy.

Only a few dividend series winners left

There are warning signs, especially from the smaller company. In the second-tier indices MDAX and SDAX, every fifth company cuts or cancels the dividend. In particular, shareholders who have invested their money in the interest-sensitive real estate industry are now at a disadvantage. In addition, there are only nine companies in the selection indices of Deutsche Börse with a series of at least ten increases in a row. Fuchs Petrolub and Stratec are positive exceptions with 21 and 20 increases in a row, respectively.

“The unrelentingly high inflation, multiple energy crises, disrupted supply chains, the fatal Ukraine war, the increasingly complex relationship with China and, last but not least, the urgent tasks of digitization pose immense challenges for companies that have only partially been mastered or mastered at all can be,” emphasizes Marc Tüngler, General Manager of DSW. “This year will show who is really resilient and geared towards the future – 2023 will be a real litmus test.”

With information from Angela Göpfert, tagesschau.de.