In this article, we will take a look at the 5 best German dividend stocks to buy. If you want to see more stocks in this selection, go to the 10 Best German Dividend Stocks to Buy.
5. Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY)
Forward Dividend Yield: 6.69%
Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY) is a Munich, Germany-based manufacturer of luxury and high-performance automobiles and motorcycles. More popularly known as BMW, the company has a headcount of 118,909 employees with 31 production locations in 15 countries.
Out of the 2.52 million automobiles delivered in 2021, the company manufactured 328,314 electric vehicles (EVs). On November 7, Adrian Yanoshik at Berenberg gave Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY) stock a target price of EUR 95 ($99.75). Three shares of BMW listed on the OTC market are equivalent to one share listed on the German stock exchange. This means that the target price provided by Mr. Adrian Yanoshik reflects a potential upside of 12.1% from the closing price as of December 8.
Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY) has maintained a strategy of operating as a premium brand that has a solid track record of delivering high-quality automobiles and motorcycles. The company carries a diverse portfolio of intellectual property (IP) and other intangible assets related to the automobile industry with a clear product portfolio, making it one of the best German dividend stocks.
4. BASF SE (OTC:BASFY)
Forward Dividend Yield: 6.95%
BASF SE (OTC:BASFY) is a Ludwigshafen, Germany-based chemical company. The biggest chemical company in the world houses 111,000 employees and has a business portfolio comprising six segments.
On October 28, Tim Jones at Deutsche Bank upgraded BASF SE (OTC:BASFY) stock from a Hold to a Buy rating and increased the target price from $57.77 to $63.02. Four shares of BASF SE listed on the OTC market in the US is equivalent to one share listed on the German stock exchange. This target price reflects a potential upside of around 25% from the closing price as of December 8. The analyst made the adjustment following meetings with the CFO and head of investor relations. Jones thinks that the current stock price does not do justice to the overall value of the company as it is trading around the same valuation as at the time of the Great Financial Crisis of 2008. The stock provides significant valuation support to investors.
Here’s what Tweedy, Browne Company LLC said about BASF SE (OTC:BASFY) in its Q4 2021 investor letter:
“With respect to ESG issues that arose as a part of our research process during the quarter, two of the Funds’ portfolio holdings took notable steps to address environmental sustainability. In addition, we engaged with two other companies regarding capital allocation. BASF, the large German chemical company, made a decision to carve out a business related to internal combustion engines and began investing significant amounts to develop a battery business. The company also committed to carbon reduction goals of net zero emissions by 2050. The CEO told us of the importance of this battery initiative in helping customers to meet their commitments to electromobility, but indicated the company will only make investments that have a visible return, making the company’s sustainability strategy more flexible and less risky in terms of profitability. In our view, this would appear to be a financially prudent step in reducing the company’s transition risk as the world continues to move toward a lower carbon economy, and should not compromise the compound of the company’s intrinsic value.”
Follow Basf Se-Spon Adr (OTCMKTS:BASFY)
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3. Varta AG (OTC:VARTY)
Forward Dividend Yield: 9.03%
Varta AG (OTC:VARTY) is an Ellwangen, Germany-based commercial, industrial and miniaturized battery supplier that aims to capitalize on the rising renewable energy market. Varta AG (OTC:VARTY) has a headcount of 3,800 employees and five manufacturing facilities. The company is active in 75 countries across the world.
Varta AG (OTC:VARTY) intends to spin off its electric mobility and battery pack business as an independent entity called V4Drive SE. As a result, the current CEO of Varta AG, Herbert Schein, will step down from this current position and will take over the e-mobility and battery packs business. The company plans to continue the construction of the V4Drive battery plant once it receives binding commitments from its customers. The plant will be focused on producing batteries for electric vehicles (EVs). It must be noted that the pilot production will proceed as per the initial plans and manufacture batteries to fulfill the needs of a premium car manufacturer. According to some observers, Porsche is said to be the premium car manufacturer that Varta AG (OTC:VARTY) will be working for. Varta AG (OTC:VARTY) offers an annual payout of $2.48, translating into a strong forward dividend yield of 9.03% as of December 8.
2. Covestro AG (OTC:COVTY)
Forward Dividend Yield: 9.14%
Covestro AG (OTC:COVTY) is a Leverkusen, Germany-based supplier of polymers that have a wide range of applications in the automotive industry. The company has over 17,900 employees present at 50 production facilities globally. The company is at the second position on our list of the 10 best German dividend stocks to buy.
Covestro AG (OTC:COVTY) commenced production of naphthalene diisocyanate (NDI) at its recently constructed facility in Thailand. The company terms NDI as one of the most powerful elastomers in the market. Furthermore, Covestro AG (OTC:COVTY) is enhancing its capabilities in the field of industrial biotechnology. The company plans to leverage the power of microorganisms and enzymes to make its products more sustainable. For the past four years, Covestro AG (OTC:COVTY) has operated a biotechnology competence center to build its production capabilities. The company has revealed that it will not get involved in capping gas prices if it is tied to a ban on dividend payments. Covestro AG (OTC:COVTY) offers an annual dividend yield of 9.14% as of December 8.
1. Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY)
Forward Dividend Yield: 18.26%
Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY) is a Hamburg, Germany-based container transportation and shipping company. The company has a fleet of 252 ships with a capacity of 11.9 million TEU (twenty-foot equivalent units). Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY) is present in 137 countries and employs 14,500 people.
The business is thriving due to higher freight rates that are yielding strong margins for the business and countering the adverse impact of higher costs. Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY) is one of the best German dividend stocks as it offers a robust annual forward dividend yield of 18.26% as of December 8.
In Q3 2022, the company’s EBIT increased by 78% YoY and 9% on a sequential basis. During the nine months of 2022, Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY) generated a net profit of $14.7 billion. The company has entered into a five-year agreement with Portchain Connect that would digitalize the berth alignment process across Hapag-Lloyd’s terminals globally. This is in line with the company’s detailed Fleet Upgrade Program, which has been underway since August 2022. Hapag-Lloyd Aktiengesellschaft (OTC:HPGLY) has also announced the appointment of Stuart Sandlin as the President of the North American business. He will take over the new role from January 1, 2023.
You can also take a peek at the 15 Best Electric Car Stocks To Buy and the 11 Best Low Risk Dividend Stocks To Invest In.
