In today’s piece, we have identified two German dividend gems, freenet AG (DE:FNTN) and Bayerische Motoren Werke AG (DE:BMW), that are offering yields above 7%. Income-oriented investors could include these shares in their portfolios to boost their income. BMW carries a dividend yield of 7.89%, and freenet has a dividend yield of 7.72%.
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When considering capital appreciation, analysts have rated freenet as a Strong Buy, anticipating a growth of over 30% in its share price. Conversely, BMW stock has a Hold rating, projecting a comparatively modest uptick of 10%.
TipRanks provides users with a wide variety of tools to assist in selecting suitable dividend stocks tailored to their requirements. In this instance, we’ve utilized the Best German Dividend Stocks tool to narrow down these two companies, taking into account a range of additional factors.
Let’s take a look at the two stocks in detail.
freenet AG
Freenet operates as a telecommunications company, offering a range of products and services, including mobile communication, the internet, television, and beyond.
According to the company’s policy, it aims to allocate a dividend equivalent to 80% of its available free cash flow. As a result of this approach, freenet is widely recognized as a premier choice among dividend stocks within the German capital market. The company’s dividend yield of 7.72% notably surpasses the sector’s average of 2.54%. In May 2023, freenet disbursed a dividend of €1.68 per share, reflecting a 7% increase from the preceding year’s €1.57 payout. This reaffirms the company’s commitment to maintaining dividend stability alongside its notable business accomplishments.
In its recently announced earnings, the company’s free cash flow increased by 5.5% to €131.5 million for the first half of 2023. It also affirmed its progress towards attaining the goals outlined for the ongoing fiscal year as well as the medium-term objectives established under its “freenet 2025” growth strategy. This makes the dividend story more safe and reliable for investors.
freenet’s Share Price Target
TipRanks assigns FNTN stock a Strong Buy rating, derived from six Buy recommendations and one Hold recommendation. The average price projection stands at €28.67, representing a notable 33.2% increase from the current trading values.
Bayerische Motoren Werke AG (BMW)
BMW is a leading car manufacturer known for its high-end vehicles all over the world. The company owns brands like BMW, MINI, Rolls-Royce, and BMW Motorrad under its portfolio.
In May 2023, the company paid a dividend of €8.5 per share, which was up from €5.8 per share paid in the previous year. The robust dividend of €8.50 for 2022 underscores the company’s financial resilience, demonstrating its capacity to distribute dividends while simultaneously making substantial investments in its transformation. This results in an existing dividend yield of 7.11%, contrasting with the industry’s typical average of 1.64%.
In its Q2 2023 earnings, the company demonstrated strong performance, registering an 11.3% surge in sales compared to Q2 2022. Additionally, the company revised its full-year earnings forecast upward, albeit accompanied by a cautionary note regarding potential supply chain challenges.
BMW Share Price Target
Analysts hold a less optimistic view on share value appreciation, citing the stock’s current elevated trading levels as a factor that constrains potential further growth. Furthermore, the company issued a cautionary statement regarding increased expenses related to the development of its electric vehicles, potentially affecting its profitability.
BMW stock has a Hold rating on TipRanks based on a total of 15 recommendations, of which only three are Buy. It also includes 10 Hold and two Sell recommendations. The target price of €109.28 is 10.17% higher than the current level.
Conclusion
For investors in pursuit of income-oriented prospects, these German enterprises offer an attractive avenue. In terms of capital growth, analysts expect more than 30% growth in freenet stock, while BMW stock has a more modest upside of 10%.
