Bayerische Motoren Werke Aktiengesellschaft (BMW.DE): A Strong German Dividend Stock for Income Investors?

Investment Thesis
Bayerische Motoren Werke Aktiengesellschaft (BMW.DE), commonly known as BMW, is a leading German automaker and a prominent dividend stock in the European market. With a strong brand, robust financial performance, and a commitment to returning capital to shareholders, BMW has consistently paid dividends and increased its payout over time. In this article, we will analyze whether BMW.DE is a good German dividend stock to invest in now, considering its dividend yield, growth, and sustainability.

BMW Stock YTD Performance
As of December 27, 2024, BMW.DE has a dividend yield of 7.73%, which is significantly higher than the average dividend yield of German companies (3.3% in 2023, expected to grow to 3.53% in 2024) and the average yield of European companies (3.47% at the end of 2023, projected to increase to 3.67% in 2024). This high dividend yield indicates that BMW is committed to returning value to shareholders through dividends.

BMW's Dividend Growth and Sustainability
BMW has a strong track record of dividend growth, with an average annual increase of 10% over the past decade. The company's dividend per share has grown from €1.30 in 2010 to €8.50 in 2022. This consistent growth in dividends demonstrates BMW's commitment to returning capital to shareholders and suggests that the company's dividend payout is sustainable.

To further assess the sustainability of BMW's dividend payout, we can look at the company's dividend payout ratio. As of December 30, 2024, BMW's dividend payout ratio is 7.8%, which is relatively high compared to its peers and industry averages. However, this high payout ratio is supported by BMW's strong financial performance and earnings growth. The company's operating margin and EPS have been stable, and its total revenue has been growing consistently.

BMW's Dividend Yield Compared to Peers
To compare BMW's dividend yield with its peers, we can look at the dividend yields of other German dividend stocks mentioned in the articles:

1. Deutsche Post AG (DHL.DE) - Dividend Yield as of December 27: 5.50%
2. Allianz SE (ALV.DE) - Dividend Yield as of December 27: 4.68%

While BMW's dividend yield is higher than that of Allianz SE, it is lower than that of Deutsche Post AG. This suggests that BMW's dividend payout ratio is relatively high compared to its peers, which could indicate a higher level of commitment to returning capital to shareholders.

BMW's Dividend Payout Ratio and Future Growth Potential
BMW's dividend payout ratio is relatively high compared to its peers and industry averages, indicating a strong commitment to returning capital to shareholders. The company's historical dividend growth and consistent increases over the past decade suggest that BMW's dividend payout ratio is sustainable and has future growth potential. However, it is essential to consider other factors, such as the company's financial performance, earnings growth, and overall business prospects, when making investment decisions.

BMW's Valuation and Investment Outlook
Given BMW's impressive surge this year, we are not surprised that it seems overvalued now. It's currently trading at an LTM adjusted P/E of 6.035439, which is noticeably higher than the average P/E of the German automobile industry. Moreover, we also noticed that its EV/Fwd EBITDA of 19.1x is also discernibly ahead of its 3Y pre-COVID EBITDA multiple mean. Its mean EBITDA multiple is just 15.8x. Therefore, we assign BMW.DE with a Neutral rating. However, if you are not bothered with its capital appreciation or total return potential, BMW.DE's robust dividend yield is still attractive. Hence, we think the current price level still offers a possible opportunity to add BMW.DE stock for income-oriented investors.

In conclusion, BMW.DE is a strong German dividend stock to consider for income investors, given its high dividend yield, consistent dividend growth, and sustainable dividend payout ratio. However, it is essential to consider other factors, such as the company's financial performance, earnings growth, and overall business prospects, when making investment decisions.