The German economy is the largest in Europe and the third largest in the world. The country attracted EUR 439 billion Foreign Direct Investment (FDI) in 2006. With a high productivity rate and a world-class education system Germany ensures that its citizens maintain high standards of living. Germany is also number one for research and is Europe’s largest logistics market. Decreasing labor costs and corporate tax levels have created an investor-friendly economy.
Some of the world’s leading companies are based in Germany. To identify the largest companies in Germany, I used the main stock market index in Germany- the DAX. The DAX contains the 30 largest and most liquid stocks traded in the Frankfurt Stock Exchange. The DAX is a performance-based index. All dividends, stock splits and other events occurring to index components are rolled into the index. The 30 stocks represented in the index are the blue chips of Germany.
DAX Index Components (stocks trading in the US have tickers noted)
|Adidas AG||ADDYY||Sports Apparel Maker|
|Continental AG||CTTAY||Auotmobile Parts|
|Deutsche Borse||N/A||Stock Exchange|
|Fresenius Medical Care||N/A||Healthcare|
|Hypo Real Estate||N/A||Commercial Real Estate|
|MAN AG||N/A||Enginnering Equipment maker|
|Metro AG||N/A||Retail stores|
Overview of German stocks listed above:
1. Adidas trades on the OTC market (Pink Sheets) with ticker ADDYY.PK. It develops and markets a wide range of sports products. Adidas owns the Reebok brand famous for footwear. ADDDY is thinly traded and is down about 53% year-to-date.
2. Allianz (AZ) is a financial services provider with main focus on the property and casualty insurance business with more than 60 million customers in 7 countries. The current yield is 11.40% and the P/E is 5.17. Over the past 5 years, the dividend growth rate has been about 30% annually.
3. The world’s largest chemical giant BASF AG (BASFY.PK) operates under more than 300 subsidiaries and affiliates. BASFY trades on the OTC market. The current yield is 9.11% and the stock is down about 50% in the last 52 weeks. The annual revenue growth in the last 5 years is 15.78%.
4. Bayer AG (BAYRY.PK) is listed in the OTC market. Bayer operates in three divisions: HealthCare, CropScience and MaterialScience. BAYRY has a dividend yield of 3.80% and the earnings growth has been negative in recent years due to many issues in its drug business.On Oct 28th the FDA sent warning letter to Bayer for illegally marketing aspirin drugs.
5. Frankfurt-based CommerzBank (CRZBY.PK) is a regional bank and trades on the OTC. Due to severe losses from exposure to sub-prime crisis in the US, the stock is down 73% in the last 52 weeks. In September, Commerzbank announced that it plans to acquire Dresdner Bank for $14.4 B to compete Deutsche Bank, Germany’s largest bank. The current yield is 14.48%.
6. Continental AG (CTTAY.OB) is an auto parts supplier and is listed in the OTC market. It operates in six divisions: Chassis & Safety, Powertrain, Interior, Passenger and Light Truck Tires, Commercial Vehicle Tires, and ContiTech. Annual EPS has increased at 32% in recent years and the yield is 7.43%.
7. Daimler AG (DAI), formerly DaimlerChrysler AG operates in four divisions: Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services and Vans, Buses. DAI pays a dividend of 7.35%. Earnings growth has been flat in the past few years and is likely to get worse due to the recession.
8. The global German Bank, Deutsche Bank (DB) reported billions in write-downs due to bad loans and investments in mortgage-backed securities. DB has lost 70% of its value in the last 52 weeks. The current yield is 11.85%. On October 31, DB reported that profits fell 73% in the 3d quarter and signalled that the dividend for 2008 will be lower than the dividend paid in 2007.
9. Deutsche Telekom (DT) is an integrated telecom provider. DT owns the T-Mobile cellphone network in the USA. DT pays a dividend of 8.14%.
10. The multi-utility E.ON (EONGY.PK) trades in the Pink Sheet market.E.ON provides natural gas and electricity to customers in Germany, Netherlands, Hungary, Slovakia, the Czech Republic and Switzerland. EON has a yield of 5.53% and the total revenue increased in 5 years.
11. Henkel (HENKY) makes household products like detergents, fabric softeners, laundry conditioning products, dishwashing products and all-purpose cleaners, hair shampoos and conditioners, bath products, deodorants,etc. Henkel pays a dividend of 3.28%. Some of its brands include Dial soap, Purex detegent, Duck Tape,etc.
12. Siemens spun-off its semiconductor chip business to form Infineon Technologies AG (IFX) a few years ago. The beta for IFX is 2.3 and its does not pay a dividend.
13. RWE AG (RWEOY.PK) is a multi-utility competing against E.ON. The current yield is 6.05% and the annual earnings and dividend growth rate is 23%.
14. One of Europe’s largest software companies is Germany-based SAP AG (SAP). The annual growth rate is 32% .SAP is one of the few IT companies to pay a dividend. Dividend yield is 2.18%.
15. The world-renowned company Siemens AG (SI) is engaged in electrical and electronics engineering with operations in over 120 countries. SI pays a dividend of 3.90%. From a 52-week high of $160 the stock has fallen to $44 last month and recovered to close at $60.15 yesterday Oct 31st.
More German stocks listed in the US can be found here.