At the end of October the ECB extended the bond purchase programme by a further nine months and the volume by EUR 270bn. The end of the ultra-expansionary phase has therefore been put back further, and the prevailing low-interest period and sustained investment crisis will continue.
Investors’ desperate search for yield is not only reflected in the valuations on the equity market, which continue to rise. Returns on high-yield bonds also continue to fall with the reciprocal ever-increasing valuation. The alternatives to equities are therefore becoming increasingly scarce, particularly from a risk-return perspective.
The dividend yields anticipated have increased in line with the recent correction in equity prices. Over the coming 12 months, we expect a dividend yield of 3.1% on the DAX, which is somewhat lower than the average since 2002. However, the Euro STOXX 50 is expected to deliver a 3.5% return. Dividend-paying shares therefore remain attractive relative to bonds, which are yielding just over 0%.
Our current dividend favourites show several stocks that now appear attractive. In addition to the dividend yield, we take into consideration the sustainability of the dividends as well as other fundamental data and valuation metrics. In our view, this can enhance the investment success in addition to reducing the risk. We recommend defensively oriented investors to count on our “dividend aristocrats”, i.e. companies that have continuously paid and increased their dividends. Investors with a greater appetite for risk should invest in shares with a high dividend yield and additional upside potential.