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In Germany, the time between April and June is when publicly listed companies usually hold their annual general meetings. Unlike in the United States or other countries, the dividend payment of German stock companies is inherently linked to their annual general meeting. The AGM approves a dividend payout, the stock goes ex-dividend the day after the general meeting, and usually the dividend is credited to accounts on the same day or the next. There are no such things as quarterly or semi-annual dividends. This means that each year, between April and June, German companies open up their coffers to shareholders for a more or less large one-time payment.

For the German blue chip index, the DAX-30, this payment is set to reach nearly 26 billion Euros this year, a sum nearly 30% higher than last year's. While there are many ETF products in Europe mirroring the DAX, US investors probably only have the choice between the iShares Germany index product (NYSEARCA:EWG) or the iShares DAX ETF (OTC:DAXXF). While the EWG holds many DAX companies, it is not an exact replica of the DAX index and holds some other companies as well.

Dividend season is always a good time to review the performance of the past year, and the dividend payouts of German companies tell us that the last year was indeed very good for corporate profits. Breaking down the dividend payment into the individual constituents might also be a good opportunity to familiarize American readers with Germany's 30 largest publicly traded corporations.

The total dividend sum for the fiscal year 2010 (compared to 2009) can be broken down as follows for the 30 companies that make up the DAX index (alphabetically):

COMPANY

DIVIDEND SUM (million EUR)

2009

2010

Change

Adidas (OTCPK:ADDDF)

73

167

+94

Allianz (OTCQX:AZSEY)

1,850

2,045

+195

BASF (OTCQX:BASFY)

1,561

2,021

+460

Bayer (OTCPK:BAYRY)

1,158

1,240

+82

Beiersdorf (OTCPK:BDRFF)

159

159

0

BMW (OTCPK:BAMXF)

197

852

+655

Commerzbank (OTCPK:CRZBY)

0

0

0

Daimler (OTCPK:DDAIF)

0

1,971

+1,971

Deutsche Bank (NYSE:DB)

466

697

+231

Deutsche Börse (OTCPK:DBOEY)

391

391

0

Deutsche Lufthansa (OTCQX:DLAKY)

0

275

+275

Deutsche Post (OTCPK:DPSGY)

725

786

+61

Deutsche Telekom (OTCQX:DTEGY)

3,386

3,011

-375

E.ON (OTCQX:EONGY)

2,858

2,858

0

Fresenius

122

140

+18

Fresenius Medical Care (NYSE:FMS)

183

197

+14

Heidelberg Cement (OTCPK:HDELY)

23

47

+24

Henkel Pfd. (OTC:HENOF)

227

310

+83

Infineon (OTCQX:IFNNY)

0

109

+109

K+S (OTCQX:KPLUY)

38

191

+153

Linde (OTCPK:LNEGY)

304

375

+71

MAN (OTC:MAGOF)

37

294

+257

Merck (OTCPK:MKGAY)

65

81

16

Metro (OTCPK:MTTRY)

386

442

+56

Munich Re (OTCPK:MURGY)

1,072

1,118

+46

RWE (OTCPK:RWEOY)

1,867

1,867

0

SAP (NYSE:SAP)

594

713

+119

Siemens (SI)

1,388

2,356

+968

Thyssen Krupp (OTCPK:TYEKF)

139

209

+70

Volkswagen Pfd. (OTCQX:VLKPY)

754

1,034

+280

TOTAL DIVIDEND SUM

20,015

25,955

+5,940

GROWTH

+29.7%

Except Deutsche Telekom, and four companies that did not change their dividend payout, all DAX constituents will distribute more in dividends this year than last year.

Deutsche Telekom [known for its T-mobile network in the U.S., where it recently made a deal with AT&T (NYSE:T)] remains the payer of the largest dividend, at more than three billion euros. It is closely followed by the other DAX heavyweights: E.ON, one of the world's largest utility companies, paid out 2.8bn EUR last week to its shareholders, while conglomerate Siemens pays 2.4bn EUR this year. Insurer Allianz will also distribute more than 2bn EUR, along with BASF, the chemical company. Car maker Daimler makes a strong comeback this year as it will distribute nearly 2bn EUR, after leaving its shareholders empty-handed last year. Germany's second-largest utility, RWE, has distributed 1.9bn to its shareholders at the end of April. Both utilities (E.ON and RWE) kept their dividend unchanged this year, in light of uncertainties over the future of their nuclear power plants. The diversified drug, plastics and crop care group Bayer, known for its Aspirin and Alka-Seltzer pills, pays out 1.2bn EUR this year. Reinsurer Munich Re paid out 1.1bn EUR, and car maker Volkswagen pays out a little more than 1bn EUR.

historical and forecast DAX dividend sum
(Click to enlarge)

In total, 10 of the 30 companies pay out more than 1bn EUR ($1.45bn) in dividends this year. In contrast to last year, all but one of the 30 constituents will pay a dividend this year. Commerzbank, which is in the process of recapitalizing, is the only DAX company that will not pay a dividend this year (and probably not next year either).

In total, the dividend sum will reach about 26bn EUR this year, and analysts at Commerzbank estimate that the total sum will rise to more than 28bn EUR next year – reaching the historic record of the 28.1bn EUR distributed for the fiscal year 2007 (in 2008) by Germany's top corporations. The DAX constituents' total market capitalization is currently around 832 bn EUR, which gives an expected dividend yield of about 3.4% for the sum of all DAX constituents. The DAX index itself is a so-called performance index, where dividends are deemed reinvested into shares of the company at the ex-date. The performance of the DAX is thus a performance that includes dividend payouts.

The following table lists the dividend payments of the current DAX components since the payment for the fiscal year 2004. The payout for 2011 is a forecast by Commerzbank analysts, and the stocks are sorted by their expected dividend yield based on this estimate. Bear in mind that some stocks have not paid out their dividend yet, skewing their yield to the downside.

table of dividends for the German DAX-30
(Click to enlarge)

Those looking for high dividend yields in the German market should consider the utilities RWE and E.ON. Their payouts are forecast to decline next year, but their yield would still remain very good (well above 5%). Deutsche Telekom also enjoys strong cash flows and pays out a large part of it in dividends, but is also buying back shares. Its dividend yield is among the highest in the DAX index. Other high-yielding stocks include Berkshire Hathaway investment Munich Re and logistics company Deutsche Post, known internationally for its DHL freight subsidiary.

Disclosure: I hold shares of Commerzbank, Deutsche Post, Deutsche Telekom, E.ON, Henkel (ordinary), Munich Re, RWE (preferred).

Source: Dividends Made in Germany: A Review of Payouts of the DAX Index