German Blue-Chips Are Increasing Dividend Payouts

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The Germany economy recovered quickly from the Global Financial Crisis (GFC) and continues to remain strong despite the ongoing fiscal crises in other parts of Europe. The largest economy in Europe is also highly export-oriented. Hence many German companies especially the larger ones depend more on overseas markets than their domestic and European markets. Even the smaller Mittelstand firms focus on exports and hold leadership positions in the making of industrial components that they supply to the larger firms.

Germany exports about 40% of its goods to Europe and the rest to other parts of the world. Currently the unemployment rate remains at a 20-year low of 6.8% and is projected to fall to 6.6% next year. Exports is projected to rise by 1.6% this year but increase to 5.0% next year. The overall economy will grow by just 0.5% this year per the German government according to a Reuters report.

Investors looking to gain exposure to European firms can consider some of the German companies due to the strength of the German economy. Another important factor that makes German firms attractive is the rising dividend payments. A report published last month by Deutsche Welle noted that German blue-chips will pay out a record amount in dividends  to their shareholders this year. From the report:

Germany’s DAX-listed stock market heavyweights were planning to pay out a total of 27.6 billion euros ($35.65 billion) in dividends to their shareholders, a study by the auditing and consulting company Ernst & Young showed on Friday.

The figure marked a new record, surpassing the 27.3 billion euros granted on aggregate in 2008. “The DAX companies continue to be in good shape despite the crisis in many parts of Europe,” Ernst & Young partner Thomas Harms said in a statement.

A closer look at the data revealed a rather heterogeneous picture, showing Deutsche Telekom shareholders as the biggest winners, with the German telecommunications giant willing to spend some 3 billion euros in terms of dividends, following its performance last year.

Source:  German blue-chip companies pay record dividends, Deutsche Welle

Not all the DAX-listed companies are increasing their dividends. BASF (BASFY), the world’s largest chemicals company has announced to increase its dividend per share from 2.50 euros in 2011 to 2.60 euros in 2012. Among the notable dividend increases, tiremaker Continental AG(CTTAY)  increased its dividends by half on a percentage basis and clothing company Adidas (ADDYY) reported a 35% increase in dividends for 2012. Commerzbank (CRZBY), Lufthansa (DLAKY) and ThyssenKrupp will not pay a dividend. According to Ernst & Young, six firms have no dividend changes and seven will pay less than last year.

Ten DAX components to consider for long-term investment are noted below with their current dividend yields:

1.Company: BASF SE (BASFY)
Current Dividend Yield: 3.84%
Sector: Chemicals

2.Company:RWE AG (RWEOY)
Current Dividend Yield: 7.41%
Sector:Multi-Utilities

3.Company: E.ON SE (EONGY)
Current Dividend Yield: 5.83%
Sector:Multi-Utilities
E.ON ADR goes ex-dividend on 5/1/2013 with a dividend payment of $1.42 per share. Withholding taxes of 26.375% will be deducted for U.S. residents.

4.Company: Allianz SE (AZSEY)
Current Dividend Yield: 2.99%
Sector:Insurance

5.Company: Continental AG (CTTAY)
Current Dividend Yield: 1.71%
Sector:Auto Components

6.Company: Deutsche Telekom AG (DTEGY)
Current Dividend Yield: 7.25%
Sector:Telecom

7.Company: Henkel AG & Co KGaA (HENKY)
Current Dividend Yield: 1.56%
Sector:Household Products

8.Company: Fresenius Medical Care AG & Co (FMS)
Current Dividend Yield: 0.91%
Sector: Health Care Providers & Services

9.Company: Adidas AG (ADDYY)
Current Dividend Yield: 1.25%
Sector:Textiles, Apparel & Luxury Goods

10.Company: Linde AG (LNEGY)
Current Dividend Yield: 1.77%
Sector: Chemicals

Note: Dividend yields noted are as of April 26, 2013. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long EONGY, RWEOY, HENKY

The 10 Leading Oil Importing Countries

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The U.S. topped the list of oil importing countries based on 2011 data as shown in the graphic below:

Click to enlarge

Top-Oil-Importing-Countries

Source: Should the U.S. Expand Offshore Oil Drilling?, The Wall Street Journal, April 12, 2013

Here are some interesting facts from the EIA site:

  • The U.S. was a net importer in 2011 and imported 45% of petroleum products consumed.
  • U.S. dependence on foreign oil has been on the decline since 2005.
  • The U.S. is the largest petroleum consumer and consumed 18.8 million barrels per day (MMbd) in 2011.
  • Canada, not any Middle Eastern country, is the top supplier of crude oil.
  • The following chart shows U.S. production, consumption and imports:

US-oil-Chart

Source: How dependent are we on foreign oil?, EIA

An earlier article on the major players supplying the world oil market can be found here.

The 15 Largest Swiss Companies By Revenue 2012

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The largest Swiss firms by revenues that are in the Fortune Global 500 list in 2012 are listed below 

Country RankCompanyGlobal RankCityRevenues($ millions)
1Glencore International14Baar186,152
2Nestle71Vevey94,405
3Novartis157Basel59,375
4Zurich Insurance Group178Zurich52,983
5Roche Group192Basel49,714
6Credit Suisse Group204Zurich48,227
7UBS215Zurich45,978
8ABB273Zurich37,990
9Alliance Boots274Zug37,977
10Xstrata325Zug33,877
11Coop Group364Basel30,022
12Adecco Group387Glattbrugg28,567
13Swiss Re394Zurich28,083
14Migros Group396Zurich28,015
15Holcim474Jona23,378

Source: Fortune Global 500, Fortune

Five of the above companies trading on the US markets are shown below with their current dividend yields:

1.Company: Nestle SA (NSRGY)
Current Dividend Yield: 3.12%

2.Company: ABB Ltd (ABB)
Current Dividend Yield: 3.19%

3.Company: Novartis AG (NVS)
Current Dividend Yield: 3.32%

4.Company: Credit Suisse Group AG (CS)
Current Dividend Yield: 2.

5.Company: Roche Holding AG (RHHBY)
Current Dividend Yield: 2.98%

Related ETFs:

iShares MSCI Switzerland Capped Index (EWL)

Disclosure:  Long ABB

Despite Ongoing Turmoil European Markets Offer Attractive Investment Opportunities

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For many years now Europe has been hit by one crisis after another.First came the fiscal crisis in Greece and then Portugal followed suit. Greece has been bailed out multiple times so far and is still struggling to recover. In general, the economies of the PIIGS countries have suffered greatly since the global financial crisis of 2008-2009. More recently the tiny island state of Cyprus triggered a new crisis and was bailed out. Up until the crisis, hardly any investor paid attention to, let alone worry about this island causing a global economic collapse.

However despite the seemingly never-ending crises, European stocks have climbed higher in the past few years. The following shows the performance of the MSCI Euope index since September 2009. This index is a measure of the developed economies of Europe including the UK.

Click to enlarge

Eurozone-Crisis-Chart

Source: European stocks rally despite the crisis, Fidelity Investments

Here is a excerpt from an article on European stocks by Michelle Gibley, Director of International Research, Schwab Center for Financial Research:

Europe’s economy is in recession, austerity is biting, politicians have repeatedly resisted measures to unite, and the Italian election is inconclusive—are there any reasons to invest in the eurozone? Actually, we think there are.

In spite of their many challenges, eurozone countries have begun to institute crucial reforms, their credit markets are thawing, and the Organisation for Economic Co-operation and Development (OECD) leading indicator and purchasing manager indexes suggest the eurozone economy has improved from the low hit in the fall. Corporate earnings and valuations remain relatively low, making it easier for companies to surpass investor expectations, and making stocks appear comparatively cheap. And in light of easing global uncertainty, we see fewer risks of a global slowdown harming the eurozone’s nascent improvement.

All of these factors contribute to our positive view on eurozone equities as a whole. Among individual countries, we prefer the stock markets in Germany and France. Select individual stocks of companies that are in cyclical sectors or have high foreign exposure or strong brands may also be worth a look.

Source: European Stock Outlook Upbeat Despite Challenges, Charles Schwab

As I have mentioned in previous posts one way to profit from the growth in emerging and other developed markets is to invest in European firms that have high exposure to overseas markets. Traditionally many European companies have maintained strong presence in foreign countries due to colonial ties. For example, many of the UK’s FTSE 100 firms generate a high portion of their revenues from emerging markets.

The YTD performance of select European equity indices are noted below:

CAC-40: 0.30%
FTSE 100: 6.6%
DAX: -2.0%
IBEX 35: -3.1%

The S&P 500 has outperformed the major European indices and is up 9.0% YTD.

Ten European stocks to consider are listed below with their current dividend yields:

1.Company: Nestle SA (NSRGY)
Current Dividend Yield: 3.11%
Sector: Food Products
Country: Switzerland

2.Company: Unilever PLC (UL)
Current Dividend Yield: 2.95%
Sector: Food Products
Country: UK

3.Company: Vodafone Group PLC (VOD)
Current Dividend Yield: 5.07%
Sector: Telecom
Country: UK

4.Company: BASF SE (BASFY)
Current Dividend Yield: 3.84%
Sector: Chemicals
Country: Germany

5.Company: Banco Santander SA (SAN)
Current Dividend Yield: 8.83%
Sector: Banking
Country: Spain

6.Company: Total SA (TOT)
Current Dividend Yield: 5.43%
Sector: Oil, Gas & Consumable Fuels
Country:

7.Company: HSBC Holdings PLC (HBC)
Current Dividend Yield: 4.33%
Sector: Banking
Country: UK

8.Company: Heineken NV (HEINY)
Current Dividend Yield: 1.31%
Sector: Beverages
Country: The Netherlands

9.Company: ABB Ltd (ABB)
Current Dividend Yield: 3.35%
Sector: Electrical Equipment
Country: Switzerland

10.Company: British American Tobacco PLC(BTI)
Current Dividend Yield: 3.87%
Sector: Tobacco
Country: UK

Note: Dividend yields noted are as of April 19, 2013. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions

Disclosure: Long ABB, SAN