Corporations are currently opening their books again. The profits determine the dividend that shareholders receive. Which companies pay dividends most reliably? And what should investors pay attention to?
For a share, it is not only the price development that is crucial, but also the distribution of profits to the shareholders – the so-called dividend. In the current reporting season, companies are opening their books again. Exciting for shareholders, because the amount of profits determines the amount of the dividend. Which companies have been reliable dividend payers for years? So-called “dividend aristocrats”? And what should you pay attention to as an investor?
Different dividend culture in the USA
Coca Cola is one of them, the consumer goods manufacturer Procter & Gamble and British American Tobacco – they are all such “dividend aristocrats”. In other words, companies that have not only been paying dividends reliably for at least 25 years, but have also continuously increased them – despite all crises and short-term stock market crashes.
There are also such reliable dividend payers in Germany, says Thomas Meier from the MainFirst asset management company. He cites SAP as an example. Siemens, Allianz and BASF are also included. However, the dividend culture in Europe is different than in the United States.
“In the United States, you pay out a little less of the available profit, but it is more reliable and sustainable in the sense of continuous increase,” says Meier. In Europe, on the other hand, more is paid out and shareholders receive higher payments per year. “But when times are bad, you just say: ‘We’ll cut the dividend or even skip it completely’.”
Special feature for foreign companies
The Stock Finder website has listed a total of 147 “dividend aristocrats”. The majority come from the United States. German investors have to pay attention to one special feature when collecting dividends from foreign companies, says Daniela Bergdolt from the German Association for the Protection of Securities Holdings: “Foreign shares, including those from other European countries, are in many cases subject to withholding tax, which means there is a tax on them the dividends are collected, which the investor does not automatically get back.”
The shareholder advocate advises that shareholders should inform themselves in advance and, if necessary, take action and get the tax back.
“Confidence signal for German economy”
Last year, the 40 major DAX companies paid out a record amount of dividends. According to calculations by the consulting firm EY, it was around 52 billion euros. But the majority of the money was paid to investors abroad.
Gerrit Fey from the German Stock Institute sees light and shadow in this: “For us, this is initially a signal of trust in the German economy, in German listed companies. Foreign investors obviously see good investment opportunities, otherwise they wouldn’t invest in these companies,” says Fey . “It’s a shame, of course, that German investors don’t always see this light.”
Most Germans still prefer to put their money in savings accounts instead of investing it long-term in stocks. Others benefit from the dividend.
Bianca von der Au, HR, tagesschau, January 23, 2024 1:32 p.m