Numbers as of 12/31/14 unless otherwise noted.
Since you clicked through on my headline, I’ll assume that you’re ready to be convinced that you should be investing in German stocks. So without delay, let’s jump right in!
- Between 1974 and June 2014, the DAX had an average annual return of 9.2%
- Between 2002 and 2007, the DAX had an average annual return of 22.8%
- Over the past 10 years, the DAX has had annual double-digit returns in seven years (27.1% in 2004, 22% in 2005, 22.3% in 2006, 23.8% in 2007, 16.1% in 2009, 29.1% in 2011, 25.5% in 2012)
- You want growth? Four DAX companies had a compouned annual growth rate (CAGR) of more than 20% over the past 10 years. A 20% CAGR would turn 1 EUR of profit into more than 6 EUR over 10 years. The four companies that achieved this incredible growth were: Volkswagen (33.7%), Infineon (24.3%), Fresenius (23%), and Linde AG (21.2%).
- Go outside of the DAX (to the SDAX, MDAX, and TECDAX) and you can find even faster growth. Wirecard AG grew net income at an average rate of 64% over the past decade while Bertrandt grew its bottom line by 39% per year.
- Profit growth can sometimes be misleading, particularly when it comes to cyclical companies, which can show high net income growth thanks to their cyclicality. But companies on Germany’s indexes are notching fast revenue growth too. Wirecard’s revenue growth rate was above 65% over the past 10 years. Both Deutsche Wohnen and freenet have 10-year revenue growth rates above 20%.
- Dividends matter for German stocks! The stock price for K+S AG shot up nearly 800% over the 20 years ending December 31, 2014. But the dividend-adjusted returns over the same time period were more than 1,500%.
- 10-year German Government bonds currently yield 0.51% (1/15/2015). 29 of the 30 DAX companies have a dividend yield higher than that. Commerzbank is the only DAX comany without a better yield — it hasn’t paid a dividend since 2007. ThyssenKrupp, with just recently reinstated its dividend, has a yield that barely tops German bonds. But “just barely” still counts.
- Two DAX companies finished the year with dividend yields above 4%. Münchener Rückversicherungs-Ge AG (4.35%) and E.ON (4.2%). RWE, BASF, and Allianz were all really close with respective dividend yields of above 3.8%.
- Do you want even bigger dividends? Check out the smaller companies. Bilfinger and freenet both finished 2014 with dividend yields above 6%. Telefonica Deutschland had a massive 10.7% dividend yield.
- Many investors use return on equity as a gauge for the quality of a business, and companies with an ROE in the double-digits are typically seen as successful. Over the last 12 months, 21 of the 30 DAX stocks have notched an ROE in the double digits. The three highest ROEs in the DAX were: Deutsche Post (25.7%), Continental AG (22.3%), and Deutsche Boerse (20.7%).
- You could’ve made a killing in the market buying just DAX stocks: Over the past 20 years, six DAX stocks had dividend-adjusted returns of more than 1,000%. The lowest return of those six (Henkel AG), delivered a 1,102% total return for investors. That works out to an average of almost 13% per year. At the high end, Fresenius SE’s 2,329% return comes out to 17% per year.
- If you’re looking for value stocks… Three companies in the DAX finished the year with price-to-earnings ratios below 10. Munich Re, Volkswagen, and Daimler were the cheapest stocks in the DAX by P/E.
- Small stocks can be cheap too. At the end of 2014, Deutsche Beteiligungs, Talanx, Schaltbau Holding, and Hannover Rück all had P/E ratios below 10.
- Dividend lovers rejoice: Over the past 10 years, I count 28 companies between the MDAX, SDAX, and TechDAX that grew their per-share dividends at double-digit rate annually.
- STRATEC Biomedical was among the fastest growers. Its dividend went from €0.05 in 2004 to €0.60 in the 12 months ending 9/30/2014.
- If fat profit margins are more your thing, then you’ll love Deutsche Boerse and SAP. They had respective EBIT margins of 42% and 31% over the most recently reported 12 months.
Could I go on? You bet I could. There are a lot of good reasons to be investing in the German market, and there is a heck of a lot of great German companies to invest in.
Bis zu 130 Mrd. US-Dollar investiert Investorenlegende Warren Buffett in nur ein einziges Unternehmen. Das zeugt von riesigem Vertrauen in das Zukunftspotential.
Buffett hat so einige Mega-Milliardeninvestments in seinem Portfolio. Wir haben sie näher analysiert, und angesehen, inwieweit sie sich zum Nachahmen eignen.