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With the ideal fat dividend for retirement?

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Rich senior couple on beach vacation

The administration of BASF-Aktie (WKN: BASF11) plans to raise the dividend again. Due to the comparatively low share price and the distribution of EUR 3.40 per share, we can say that this is a great dividend. With 6.34% currently at a share price of 53.61 euros, this value stands out.

So should BASF shares be a candidate for a retirement portfolio? The answer may surprise you. Because let’s take a look today at the qualities and shortcomings that the DAX chemical group has to offer its investors.

Are BASF shares ideal for retirement?

Investors should at least think about a quantitative addition to BASF shares for a boost in earnings. I know, I know: a year or two ago I rated it differently. However, management has done much to show that dividends are a priority, even in difficult times.

The €3.40 per share that BASF shares are now paying is the result of another slightly larger dividend this year. Despite the coronavirus pandemic, despite a declining economic cycle, which has continued since 2019 with earnings per share of €2.98 (excluding one-time items). It is really a constant race. With a current earnings per share of more than 6 euros, the dividend is back on a sustainable basis.

Therefore, the leadership of the DAX chemical group is putting a very conscious focus on stable distributions. Despite the cyclical business model, this is a base that can be interesting for income investors. With a current price/earnings ratio of 9, many risks and possible cyclical fluctuations are already discounted for me.

Due to the cyclical business model, I would not put BASF shares at the top of my retirement portfolio. Simply because the share price sometimes fluctuates more wildly. But there is little to say about a smaller mix. Especially since DAX shares are a reasonable exception to me, where the 6% dividend yield carries a risk that doesn’t seem too great.

Yes, build on this quality in parts.

Therefore, betting on BASF shares with a dividend yield of more than 6% for retirement may be smart. Again, the tip: For me, it wouldn’t be a great investment for a retirement savings account, but it would be a healthy addition that can give your income a boost. At least that would be my approach to stocks.

For more than a decade, the chemical company has shown that stable payments are a priority. Even recently, when times were noticeably tougher. It is time to recognize that being aware of the quality of dividends despite cyclicality.

BASF article shares: With the ideal big dividend for retirement? first appeared in The Motley Fool Germany.

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Vincent owns BASF shares. The Motley Fool does not own any of the shares mentioned.

Motley Fool Germany 2022

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