Germany's largest listed companies are once again rewarding their shareholders with record dividends, despite facing significant economic challenges. According to calculations by EY, the 40 DAX companies are set to distribute a total of approximately 54 billion euros for the financial year 2024. This figure is only slightly below the previous year's record distribution of 54.1 billion euros, marking a mere 0.2 percent decline. This year, 23 of the 40 companies are increasing their dividends, while only three are opting out of any payouts.
The automotive industry, however, is seeing a downturn in dividend payments. Mercedes-Benz, which was the largest dividend payer in the previous year with 5.5 billion euros, has dropped to third place with a planned distribution of 4.1 billion euros, reflecting a 25 percent decrease. In contrast, Allianz leads the pack this year, with an expected dividend increase of nearly 12 percent to 15.40 euros per share, totaling around 5.9 billion euros. Deutsche Telekom follows closely behind with a planned payout of 4.4 billion euros.
Despite the overall decline in profits, which fell by about 21 percent to a net total of 96 billion euros after taxes, the dividend payouts remain robust. The decline in profits is largely attributed to a non-cash-effective value adjustment of 23.3 billion euros linked to the holding company Porsche SE's involvement with Volkswagen and Porsche. Without this adjustment, the overall earnings would have only dropped by 0.4 percent compared to the previous year.
Jan Brorhilker, Managing Partner at EY, expressed optimism regarding the dividend situation, stating, "Given the difficult economic situation and significant cyclical and political risks, the nearly record-high dividend payout from the DAX companies is very positive news. Many DAX companies have reported strong numbers for 2024 and are on track for another record year in 2025." However, he also noted the varying performances among companies within the index, with some facing significant headwinds and profit declines.
As the German economy grapples with a slowdown, DAX companies are increasingly reliant on their international operations, which account for around 80 percent of their revenues. Economists are currently concerned about escalating trade conflicts, particularly with the United States, which could lead to global growth losses and impact corporate earnings.
Among the DAX companies, 14 are set to pay record dividends this year, including Allianz, Munich Re, Siemens, and Deutsche Börse. Notably, Commerzbank and Deutsche Bank have announced significant increases in their dividend payouts. Conversely, three companies—Zalando, Siemens Energy, and Qiagen—will not be distributing dividends for 2024.
Despite the challenges, nine companies have managed to maintain or even increase their dividends to keep investors engaged. This year, the DAX companies are distributing approximately 56 percent of their profits as dividends, compared to 44 percent last year.
However, the automotive sector is facing a harsher reality, with BMW, Mercedes-Benz, and VW all significantly cutting their dividends. Brorhilker warns that shareholders in the automotive industry may need to adjust their expectations, stating, "Shareholders in the auto sector will likely have to get used to leaner dividends for the foreseeable future."
Looking ahead, while the economic landscape remains uncertain, the current trend suggests that stable high dividends for all 40 DAX companies could be the most likely scenario for the financial year 2025. As the first quarter comes to a close, the outlook for dividend distributions in the coming year remains cautiously optimistic, buoyed by the performance of several resilient companies within the index.
