We recently compiled a list of the 8 Best German Dividend Stocks To Invest In. In this article, we are going to take a look at where Allianz SE (XETRA:ALV.DE) stands against the other German dividend stocks.
Europe’s economy might see some positive developments in 2025, but risks still loom. Strong U.S. growth could boost demand for EU exports while easing inflation in Europe may lead the ECB to cut interest rates, spurring investment and economic growth. A potential increase in U.S. fossil fuel production could lower global oil prices, benefiting oil-importing countries like those in the EU. Additionally, US tax cuts might strengthen the dollar, making European goods more competitive globally. However, the EU’s growth prospects hinge on geopolitical stability. Escalations in conflicts like the war in Ukraine, tensions in the Middle East, or a possible China-Taiwan crisis could derail this cautiously optimistic outlook.
Despite these challenges, Goldman Sachs Research is optimistic about European stocks in 2025, expecting the European index to deliver around a 9% total return, despite challenges like political uncertainty and slow economic growth. In a recent discussion with Sharon Bell, a senior strategist at Goldman Sachs, she explained that while they’ve slightly lowered their forecasts for the index, European stocks could still benefit from cooling inflation and a robust policy response. The team downgraded their targets due to weaker economic data and rising risks in countries like France and Italy. However, they believe the situation isn’t as dire as past crises. They see potential in sectors like telecoms and real estate, which may thrive as interest rates are expected to drop to 1.75% by mid-2025.
This expected drop in rates could also favor smaller, more indebted companies, which might benefit from increased mergers and acquisitions. However, these companies remain vulnerable to weak economic growth. Bell pointed out that a declining euro could enhance the competitiveness of European companies by reducing costs, though it might also discourage foreign investment. Furthermore, European firms heavily rely on sales from the US and China, as domestic sales within Europe have stagnated over the past two decades.
In this context, lower interest rates could help stimulate economic growth and drive higher valuations for European stocks. However, Goldman Sachs remains cautious about the scale of this growth, particularly given persistent inflation concerns. While U.S. equities have recently outperformed their European counterparts, a shift in US valuations could make Europe a more attractive option for global investors.
Supporting this outlook, dividends are emerging as a key contributor to European equity returns. For European companies, the average yield was 3.47% at the end of 2023 and it was projected to increase to 3.67% in 2024, remaining higher than long-term German government bond yields despite their significant rise in 2022. German companies reported a 3.3% dividend yield in 2023, which was expected to grow to 3.53% in 2024. The Allianz Global Investors Dividend Study highlighted the significance of dividends in equity investment returns. Over the past 40 years, dividends have accounted for nearly 36% of the annualized total return of European equities.
Our Methodology
For this article, we used the iShares DivDAX® UCITS ETF (DE) to filter out German dividend stocks. The ETF aims to replicate the performance of an index comprising 15 high dividend yield stocks selected from the 30 largest and most actively traded companies on the Frankfurt Stock Exchange’s Prime Standard segment. From this fund, we focused on picking prominent stocks with stable yields and strong dividend policies. The list below is ranked in the ascending order of dividend yield as of December 27.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
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Allianz SE (XETRA:ALV.DE)
Dividend Yield as of December 27: 4.68%
Allianz SE (XETRA:ALV.DE) is a global company based in Munich, Germany, specializing in insurance and asset management services. Allianz SE (XETRA:ALV.DE) offers diverse services – property-casualty insurance for individuals and businesses, life/health insurance covering life plans and health benefits, asset management for institutional and retail investors, and banking and digital investment solutions through its corporate segment.
Sanlam, a South African financial group, and Allianz SE (XETRA:ALV.DE) formed a joint venture, Sanlam Allianz Africa (SanlamAllianz), in September 2023 for their African operations. Sanlam Emerging Markets (SEM) has agreed to sell 8.59% of its share to Allianz Europe BV for R4.5 billion, resulting in SEM holding 51% and Allianz BV 49%. The deal is subject to regulatory approvals and adjustments based on 2024 financials.
In Q3 2024, Allianz SE (XETRA:ALV.DE) reported strong financial growth, with total business volume rising 17.3% to €42.8 billion and operating profit increasing 13.6% to €3.9 billion, driven by strong results in the Property-Casualty segment. Shareholders’ core net income grew by 23% to €2.5 billion. Based on its robust performance, Allianz SE (XETRA:ALV.DE) expects 2024 operating profit to reach the upper half of its €14.8 billion ± €1 billion target range. Additionally, a €1.5 billion share buyback program was completed by October 2024.
Allianz SE (XETRA:ALV.DE), known for its high dividends in the DAX, has increased its dividend by an average of 10% annually over the past decade, reaching €13.80. On December 9, 2024, the company expanded its Dividend Policy into a broader Capital Management Policy, based on net income and capitalization needs. The policy ensures a 60% payout of net income (adjusted for extraordinary items), maintains a dividend per share at least equal to the previous year’s amount, and commits to returning at least 15% of net income to shareholders through share buybacks from 2025-2027. Allianz is one of the best German dividend stocks to buy, with a dividend yield of 4.68% as of December 27.
Overall ALV.DE ranks 6th on our list of the best German dividend stocks to invest in. While we acknowledge the potential of ALV.DE as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALV.DE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
