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 Deutsche Post AG (XETRA:DHL.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)
A fleet of rented trucks parked alongside a warehouse, emphasizing the company's logistics services.
Deutsche Post AG (XETRA:DHL.DE)
Dividend Yield as of December 27: 5.50%
Deutsche Post AG (XETRA:DHL.DE) is a global mail and logistics provider with operations in Europe, the Americas, Asia Pacific, the Middle East, and Africa. It provides express courier services, freight solutions via air, sea, and land, tailored logistics and supply chain solutions, parcel delivery, cross-border services, and mail communications. Established in 1995, Deutsche Post AG (XETRA:DHL.DE) is based in Bonn, Germany. In October 2024, the Universal Postal Union recognized Deutsche Post, along with Swiss Post, as the top postal service provider worldwide. This conclusion comes from the UN's annual study, which evaluates the performance and progress of 174 postal operators globally.
Deutsche Post AG (XETRA:DHL.DE)’s Q3 2024 results met expectations, with EBIT flat year-on-year, an improvement from the 20% decline in Q1 and Q2. B2C parcel markets are ramping up seasonally, but B2B volumes remain subdued, particularly in Europe, due to the macroeconomic environment. Express showed slight EBIT growth and solid margins, while DGFF and P&P Germany faced challenges. The company revised its 2024 EBIT forecast to >€5.8 billion and adjusted its mid-term growth expectation for 2026 EBIT to >€7.0 billion.
Deutsche Post AG (XETRA:DHL.DE) has revised its FY 2024 capex guidance to €3.0-3.2 billion and free cash flow guidance to €2.8-3.0 billion, supporting dividend continuity and the share buyback program. The firm remains committed to paying 40%-60% of net profit as dividends, ensuring next year’s payout matches this year’s. The current share buyback plan will be concluded by year-end. DHL is one of the best German dividend stocks for an income portfolio.
Overall DHL.DE ranks 5th on our list of the best German dividend stocks to invest in. While we acknowledge the potential of DHL.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 DHL.DE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
