Hey everyone, almost every dividend investment blog more or less only covers stocks from the US-market and from time to time from the UK market. But through the recent heavy decline of the German stock market, there are some German stocks which got now very interesting and which offer a really good yield. One of those stocks I already had in my portfolio but sold it at the beginning of this year. In the German stock market, you do not really find a lot of companies with a good dividend tradition as the dividend policy is rather conservative compared to the US and the payouts are only once a year, which does not make so attractive for dividend investors. But nevertheless, there are some interesting companies as well. So let’s have a look at three of them….

BASF

Based in Germany, BASF is the world’s largest chemical company, with products spanning the full spectrum of commodities to specialities. In addition, the company is a strong player in agricultural crop protection and has a sizable exploration and production business in oil and gas. Given its sheer size, BASF has a top-three market position in 70% of its businesses. Around half of sales are generated in Europe, while North America and Asia each account for about 20% of sales.

• Dividend: In 2018 the company paid a yearly dividend of 3.10 EUR which equals a yield of 5.33%. The latest dividend increase was at 3.33%, which is below my goal to have an average dividend increase of 7.5%. BASF has increased its dividend for the last 7 years and the expected dividend in 2019 is 3.22 EUR
• Payout Ratio: The current payout ratio is at 48.1% which is on a very healthy level and gives also some room for future dividend growth.
• Financial health: With an equity ratio of 41.64% and debt to equity ratio of 0.47 the company’s financial situation is more than stable.

Daimler AG

Based in Stuttgart, Germany, Daimler makers Mercedes-Benz and Smart cars, commercial trucks and vans, and buses. Brands include Mercedes-Benz, Freightliner, Western Star, Fuso, Setra, and Orion. Daimler Financial Services provides the company’s dealers and its customers with vehicle financing. Daimler owns 3.1% each of Renault and Nissan, while Renault owns 3.1% of Daimler. Daimler also owns 15% of Russian truck maker Kamaz. Li Shufu, chairman of Chinese automaker Geely Automobile, owns 10% of Daimler. Other major shareholders include Kuwait Investment Authority at 7%, BlackRock at 6%, Renault-Nissan Alliance at 3%, and Harris Associates at 3%.

• Dividend: In 2018 the company paid a yearly dividend of 3.65 EUR which equals a yield of 7.84%. The latest dividend increase was at 12.31%, which is above my goal to have an average dividend increase of 7.5%. Daimler has not cut its dividend for the last 8 years and the expected dividend in 2019 is 3.56 EUR
• Payout Ratio: The current payout ratio is at 37.1% which is on a very healthy level and gives also some room for future dividend growth.
• Financial health: With an equity ratio of 25.05% and debt to equity ratio of 1.06 the company’s financial situation is ok but not as healthy compared to BASF

BMW

In addition to being one of the world’s leading premium light-vehicle manufacturers, BMW Group produces BMW motorcycles and provides financial services. Premium light-vehicle brands include BMW, Mini, and ultraluxury brand Rolls-Royce. Operations include 24 production facilities in 13 countries, with a sales network reaching 140 countries. Worldwide annual volume exceeds 2 million automobiles and more than 120,000 motorcycles.

• Dividend: In 2018 the company paid a yearly dividend of 4.00 EUR which equals a yield of 5.6%. The latest dividend increase was at 14.28%, which is above my goal to have an average dividend increase of 7.5%. BMW has increased its dividend for the last 8 years and the expected dividend in 2019 is 3.85 EUR
• Payout Ratio: The current payout ratio is at 30.5% which is on a very healthy level and gives also some room for future dividend growth.
• Financial health: With an equity ratio of 26.59% and debt to equity ratio of 1.06 the company’s financial situation is also stable and similar to Daimler AG.

Conclusion

Given the current stock prices of three companies, I honestly want to buy all of them but that does not work :). I believe that all 3 companies are heavily undervalued but for me, BASF is the safest pick followed by BMW. Especially I think BMW has already a huge advantage compared to Daimler when it comes to Electric cars and autonomous driving. But Daimler on the other side has always been able to reinvent its brand. So let’s see which companies I will pick but it will definitely one of the three in the coming week…

Which European stocks are also attractive for you? What do you think about this watch list?