As Tagesschau reports, dividend payments by DAX companies have reached a record high this year. In total, the 40 companies in the German stock index (DAX) are distributing around 55 billion euros to their shareholders – more than ever before. This sum significantly surpasses previous highs from past years.
Distributions are an important criterion for many investors when selecting stocks. Dividend stocks are considered relatively stable and offer regular returns independent of price gains. However, according to financial expert Angela Göpfert, investors should not focus solely on the amount of the dividend. What is crucial is the sustainability of a company's distribution policy.
A key indicator is the so-called dividend yield, which represents the ratio of the dividend to the stock price. A high yield may seem tempting, but it is often a warning sign: it can indicate that the stock price has fallen – possibly due to problems within the company. According to Göpfert, investors should therefore check whether the dividend can be financed from ongoing profits. A too high payout ratio relative to earnings cannot be maintained in the long run.
Another important aspect is the continuity of dividend payments. Companies that have paid stable or increasing dividends over many years are considered more reliable. Tagesschau points out that some DAX companies have kept their dividends constant or even increased them during economically difficult periods in recent years.
Private investors should also consider the tax framework. In Germany, dividends are subject to a withholding tax of 25 percent plus a solidarity surcharge and, if applicable, church tax. However, there is a tax-free allowance for capital gains of 1,000 euros per person (2,000 euros for joint assessment), up to which capital income remains tax-free.
The record distribution by DAX companies is also a sign of the overall good earnings situation of the German economy. Many companies have achieved high profits in recent years and are now passing on part of them to their shareholders. However, Göpfert warns against blindly relying on dividend stocks. They are also subject to price fluctuations and are not immune to corporate crises.
Investors focusing on dividends should therefore build a diversified portfolio and not rely solely on individual stocks or sectors. Broad diversification across different sectors and regions can reduce risk. Additionally, it is advisable to regularly review the dividend policy of the companies and make adjustments if necessary.
Overall, the high dividend payments by DAX companies offer interesting opportunities for investors, but they also require careful analysis. Those who heed the mentioned criteria can benefit from the dividends.
