The stock of Deutsche Telekom has shown resilience as a traditionally defensive investment amid the overall weakness of the German stock market, with a notable increase of +17% since the beginning of the year and an impressive +53% over the past 12 months. Investors are keenly awaiting the upcoming Annual General Meeting (AGM) scheduled for April 9, 2025, in Bonn, where a significant increase in the annual dividend to 0.90 euros is anticipated. This increase, at the current share price of 34.16 euros, translates to an annual yield of 2.64%, signaling confidence from the company’s management in achieving its set goals.
In addition to the dividend news, the German state still holds around 14% of Deutsche Telekom shares directly, with an additional nearly 14% held by the state-owned KfW. This entire package of state-owned shares has a current market value of nearly 48 billion euros. Given the current economic climate, characterized by strained state finances and significant infrastructure investment needs, the new government may be tempted to monetize these assets, potentially leading to a sale that could further boost the stock price.
A potential sale of the state’s stake in Deutsche Telekom would typically be conducted through a bidding process, which usually drives the price up. Market analysts expect that the sale could fetch significantly more than the current 48 billion euros, positively influencing the stock price further. This prospect is likely to delight Deutsche Telekom shareholders, especially with the anticipated high dividend payouts at the AGM.
As the market eyes the upcoming AGM, a new analysis from April 2, 2025, raises crucial questions for current shareholders: should they buy or sell Deutsche Telekom stock? The analysis provides insights into the company’s latest financial figures, urging shareholders to consider their options carefully.
On a broader scale, around 25 publicly listed companies in Germany are set to pay out their dividends this year, either in full or partially without tax deductions, with Deutsche Telekom being one of the first to do so in April 2025. The AGM on April 9 is expected to approve a dividend of 90 cents per share, which will be paid out without any tax deductions. The ex-date for the dividend is April 10, 2025, with the payment date set for April 14, 2025. The current dividend yield is reported at 2.6 percent, which is attractive for investors.
The ability to distribute tax-free dividends stems from past balance sheet restructurings. Shareholders will receive their dividends “gross for net,” meaning that the tax allowance (1,000 euros for singles and 2,000 euros for jointly assessed partners) will not be deducted from their payouts. This is a significant benefit for investors, particularly in a climate where tax efficiency is increasingly important.
Long-term benefits from these tax-free distributions are primarily available to investors who purchased their dividend-paying stocks before the introduction of the capital gains tax in 2009. They can enjoy tax-free capital gains upon selling their shares. For those who entered the market after 2009, while they do not receive tax-free distributions, they can still benefit from a tax deferral effect. When they sell their shares, the tax-free dividends received are deducted from their purchase price, reducing the taxable capital gains.
Moreover, there are strategies for investors with familial ties to preserve tax advantages. Shares bought after 2008 can be transferred to the accounts of children or grandchildren, allowing the younger generation to sell the stocks just before their original purchase costs are fully depreciated. For the 2025 tax assessment year, these heirs benefit from their own tax allowances, which total 13,132 euros (including the basic allowance and saver's allowance), ensuring that realized capital gains remain tax-free up to that limit. However, transferring shares back to the original owner’s account is viewed by tax authorities as an illegal tax avoidance maneuver.
As Deutsche Telekom prepares for its AGM, investors are advised to keep a close eye on the developments surrounding the dividend announcements and potential state share sales. With the market dynamics shifting and the company’s strong performance over the past year, it will be interesting to see how shareholders react in the coming weeks. The insights from the latest analysis will undoubtedly play a crucial role in guiding investment decisions.
In conclusion, Deutsche Telekom remains a focal point for investors looking for stability and growth in a fluctuating market. With promising dividend prospects and potential changes in state ownership, the upcoming AGM could set the stage for significant developments that may influence the stock’s future trajectory.
