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.
Vincent owns BASF shares. The Motley Fool does not own any of the shares mentioned.
Motley Fool Germany 2022