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Daimler: The Best Dividend And Return Play In The Global Automobile Sector

Stefan Redlich profile picture
Stefan Redlich
24.02K Followers

Summary

  • Daimler's stock has performed poorly in 2017 being down 10% on the DAX.
  • Fundamentally the company is very strong, and it is investing heavily in the future of automobiles while improving its profitability metrics.
  • At the same time there is uncertainty regarding emission values.
  • The company boasts a high dividend with a 40% payout ratio and is an attractive long-term value play in a cyclical sector.

Prior to the Q2/2017 results to be announced in mid-/end July I am reiterating my bullish opinion on Daimler (OTCPK:DDAIF) for both income and capital appreciation. The stock has been the worst performer of the German stock market (DAX) in 2017 being down 10% YTD in euro terms. Its USD-denominated ADR stock has been pretty much flat this year.

The company has seen a stellar 2016 and the most recent Q1/2017 results have been impressive as well. The market is currently overly cautious regarding Daimler's future, which I consider to present an attractive buying opportunity.

This article will only refer to the stock traded on the Frankfurt stock exchange and hence all values will be expressed in EUR (€).

What is going on at Daimler?

The stock has seen a dismal 2017 so far being down 10% YTD with the overall German market rising by more than 7%.

Source: Godmode-Trader; Daimler stock price (€)

The stock is also subsequently lagging the performance of other global car manufacturers as illustrated below:

What this shows is that apart from struggling Japanese car makers Toyota (NYSE:TM) and Honda (NYSE:HMC), Daimler stock is being outperformed by both its German competitors Volkswagen (OTCPK:VLKAF) and BMW (OTCPK:BMWYY) as well as US major car manufacturers General Motors (GM) and Ford Motor Company (F). Moreover, we can also clearly see that an investment in the stocks of the big automobile companies has not really netted any returns YTD.

With all the talk being about how Tesla (TSLA) is going to disrupt an entire industry, despite neither making any profits nor having comparable financial solidity, and its stock price reaching stratospheric heights, investors have dumped stocks of the established car manufactures on large scale.

Such a sharp sell-off always alerts me to do my due diligence on the stock

This article was written by

Stefan Redlich profile picture
24.02K Followers
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio focused on Dividend Growth, both on the high and low-end yield spectrum. Primary focus is on Blue Chips with long-reaching dividend track records. I have been investing for 2 years and have been standing on the sidelines for way too long before. I love developing spreadsheets in Google and Excel to analyze financial performance and integrate these two sources with each other!Happy to connect on the various channels!

Analyst’s Disclosure: I am/we are long DDAIF, BMWYY, GM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am not a licensed financial professional. This article is for informational/entertainment purposes. Be sure to consult a professional and do due diligence before investing in equities, as losses up to and including all capital invested can be incurred. I may initiate or add a position at any time.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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