Is the economic crisis strangling the boom?
German companies pay record dividends
April 13, 2024, 5:35 a.m
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The economy in Germany is slowing down, but shareholders are not yet feeling the effects. The DAX companies will pay almost 54 billion euros to their investors in 2023. But this record could be followed by a crash.
Despite falling profits, the companies in Germany’s top stock market league are paying out a record sum to shareholders this year, according to a study. At a total of 53.8 billion euros, the windfall is larger than ever since the first analysis in 2012, as the consulting firm EY has calculated. That is 2.4 percent more than last year. 23 of the 40 DAX companies are increasing their payout amounts this year.
According to EY, the largest payer this year is the car manufacturer Mercedes-Benz (5.5 billion euros) – despite a slight decrease in the payout amount of 0.7 percent. Closely followed by the Munich insurance group Allianz with an increase of 18 percent to 5.4 billion euros. Volkswagen takes third place with 4.5 billion euros. The car manufacturer has increased the amount paid out to its shareholders by three percent.
The dividends for the previous financial year are paid after the general meeting. The shareholders of Porsche AG can look forward to a particularly significant increase: According to the study, the car manufacturer is increasing its payout by 129 percent to 2.1 billion euros. The shareholders of a total of nine companies received less than in the previous year, and the shareholders of five companies were left empty-handed. The other DAX companies have not changed their distribution policies.
DAX companies announce savings programs
The dividend total rose, even though the DAX companies overall earned less last year. According to the information, the consolidated results fell by six percent to 120.9 billion euros. However, the payout ratio – i.e. the share of dividend payments in total profits – “at 44.5 percent is still below the 5-year average of 47.6 percent and therefore at a solid and justifiable level,” explained EY partner Mathieu Meyer .
Poorer economic prospects leave it unclear how long the dividend boom will last, said Meyer. “The economic situation is bleak; both the economic and political risks are increasing rather than decreasing.” In view of falling quarterly profits, more and more DAX companies announced tough austerity programs. “If the pressure on profits continues this year, dividend distributions will probably also be put to the test,” predicted Meyer. According to EY, the evaluation from the beginning of April takes into account, among other things, all invitations to the general meetings with the dividend announcements of the DAX companies.