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Time To Repurchase Some Allianz Shares

Mar. 10, 2020 9:45 AM ETAllianz SE (ALIZF) Stock6 Comments
The European View profile picture
The European View
13.1K Followers

Summary

  • Recently, the price increases of the Allianz shares have had a rather negative effect on the dividend yield.
  • That is why I was already hoping for smaller setbacks so that I could buy more. The corona shock has opened now a window for further repurchases.
  • The dividend yield is back in a range that I find interesting, the operating performance is outstanding, and the business is less susceptible to corona than some investors may fear.

Introduction

Allianz (OTCPK:ALIZF) is one of the largest holdings in my widely diversified retirement portfolio, accounting for 2.5 percent of all holdings. I usually buy more shares every year. In recent years, prices for my repurchases have tended to become more and more expensive, as the share price has also continued to rise. Recently, the price increases have had a rather negative effect on the dividend yield, which is why I was already hoping for smaller setbacks so that I could buy more cheaply again. The conclusion of my last analysis sums up my sentiment quite well:

The difficult market environment with low-interest rates and the associated decline in profitability of the largest business segments could continue to weigh on the share price in the future. This, of course, limits the further upside potential and opens up space for possible price corrections. Price setbacks can then make the dividend yield more attractive again.

In the wake of the corona shock that shook the markets, the time has come for me to buy more. Even if prices continue to fall, there were nevertheless good reasons to buy, which I would like to explain in more detail below.

Great performance

One reason for the purchase is certainly that Allianz is performing extremely well, although one would expect more severe operational problems given the difficult market conditions. But this is not the case. 2019 was an extremely successful year. Here are the highlights, short and sweet:

  • Revenue increased by 5.9 percent in 2019.
  • 2019 operating profit of 11.9 billion euros (upper half of the 2019 target range).
  • 2019 net income attributable to shareholders up 6.1 percent to EUR 7.9 billion.
  • EPS increased by 8.4 percent to a record EUR 18.90.
  • RoE of 13.6 percent.
  • The Solvency ratio went up significantly to 212 percent.

This article was written by

The European View profile picture
13.1K Followers
Runner of the TEV Blog | Private InvestorI am a long-term oriented investor and in my early thirties. I hold a law degree and a doctorate in law and love investing and talking about my and others' investments. I regularly write about my research and investments on various investor platforms and the TEV Blog. **My articles represent my opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions.**

Analyst’s Disclosure: I am/we are long ALIZF. 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.

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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Comments (6)

LeightonS profile picture
I find Allianz interesting at these prices but I worry they do have some risk to the virus. They have a HUGE book of annuities, mostly held by seniors, and there is risk if a large number of holders were to die prematurely. This is because many annuities surrender charges do not apply if the client passes away. Additionally some annuities have an up front bonus, say 10%, which they could claw back if the person prematurely surrenders the contract. But they cannot claw back any upon death. Thoughts?
Luca Stein profile picture
@LeightonS

I just know that they have some guarantees for life policies for senior citizens who are outdated and they guarantee to get them 100% back even if investments go south. If I am not mistaken that’s quite expensive - not 100% sure they even make money with them.

But they now have some new contracts who are way better for the customers and investors.

The retirement buisness is quite weird tbh quite honest with you.

I hope they can grow their other Ventures and not this buisness.
captaindividend profile picture
The withholding tax situation for uk investors is an issue to consider when buying

Long Allianz
F
Frza
10 Mar. 2020
100% agree. I’ll try to get 6% yield on this stock by waiting for a dip below 160. But I assume there won’t be a dividend increase this year.
Christian K. profile picture
They actually have announced that they would propose a dividend of €9.60 (€9.00) on their AGM in May, thus a 6.7% increase.
F
Frza
11 Mar. 2020
@Christian K. that’s the dividend for 2019.
I am quite sure that Asset Management and Health Insurance will have troubles this year due to Covid-19 - which should end in an earnings decrease and therefore a stable dividend without increase.
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