Contact

The Most Stable DAX Shares Over Time

September 24, 2021
by Leon Marshall,

Article Recap

The DAX is a stock market index consisting of the 40 major German companies that are trading on the Frankfurt Stock Exchange. Find out which are some of the most stable shares.

The DAX 30 is the index that used to represent the 30 largest German companies by market capitalisation. Following an announcement by the operator Deutsche Börse, it became public knowledge that an expansion to the DAX 40 is upon us. It takes the 10 largest companies from the DAX listing, which comprises 50 stocks from classic sectors sorted by market capitalisation and stock exchange turnover. With the change now active, it is a great time to reconsider trading the DAX shares that are considered to be the most stable over time.

The top performers

Deutsche Börse now require of candidates “a positive EBITDA (earnings before interest, taxes, depreciation, and amortization) in their two most recent annual financial statements”, in addition to other changes to adherence and sanctioning policies. With that taken into account, let’s take a look at the most stable DAX shares over time.

Allianz (FWB: ALV)

Allianz functions as a multinational asset management and insurance company that has branches all around the world. Its performance in recent years had been in the positive digits. However, due to last year’s pandemic, operating profit saw a decline for the first time in almost a decade. 

The net profit in Q2 of 2021 has jumped to 2.225 billion euro compared with the 1.528 billion from a year earlier, which beat the consensus forecast of 2.055 billion euro. It is now aiming for even higher figures throughout the rest of 2021, between 11-13 billion euro.

Recent investigation by the U.S. Department of Justice into possible misconduct by fund managers, in addition to misrepresentation of risk to investors, has now put the company under the microscope. Once the final results are in, we will be made aware whether there is a reason for concern. If there is no concern, Allianz’s position as one of the most stable stocks on the DAX would be agreed on. 

BMW (FWB: BMW) 

The German luxury carmaker has been performing well despite the shortage of semiconductors on a global scale, with Q2 FY21 net profit results of 4.8 billion euro compared to the 200-million-euro loss during the same period last year due to the pandemic.

Growing concerns around the coronavirus hit BMW during March 2020, but until then and after that, it has been keeping it rock-solid steady. The last three years have been, at their lowest, with a little less than 60 euro per share, and at its highest, just over 80. Currently, BMW stock is sold at a rate of 85 euro per share.

The company’s idea of sustainable and an emission-friendly vehicle lineup have become reasons for a roadmap between 2020 and 2025-2030 to work on various aspects. Some of those include improving strategic targets, increasing EV production, having more management positions be occupied by women, and overall reduction of CO2 emissions.

Daimler (FWB: DAI)

Splitting into its public car and truck businesses Mercedes and Daimler Trucks later this year, Daimler currently has one of the most stable stocks in the index. Despite the dipping in March of last year, DAI (or DDAIF) has been at it for the past 5 years and is one of the most well-balanced stocks out there, with stocks being as high as 92 USD and with an average of approximately 70 USD per share.

Further to that, its shares continue to gain the more time passes, and its Forward P/E and PEG ratios are 7.01 and 0.84 respectively. The PEG ratio is similar to its more widely-used counterpart, but it also takes the expected earnings growth rate into account. All of this puts the company in a high spot and a top pick if you’re looking to go bullish.

E.ON (FWB: EOAN)

As a multinational energy company, E.ON SE takes care of power and gas distribution networks as well as maintenance, repairs, and other services. Many traders called its shares a “dirty” investment in the past. However, with its continued growth, EOAN has shown consistent positive results. Its focus on decarbonisation and reducing emissions will affect all of Europe in the coming decades.

E.ON was not as severely impacted as other companies in Europe when the pandemic hit, and its forecast for the future includes EBIT growth of 11-13% and dividend growth up to 5% p.a. This is largely attributed to the success over the years, counting almost a decade, with historical trading volatility sitting at P/E multiples of 10-18X, an average normalised P/E ratio of around 13X. 

Siemens (FWB: SIE)

Siemens is a conglomerate in the tech industry. It has several divisions– two of them are Siemens Energy and Siemens Healthineers. The latter has now joined the DAX. Former Siemens company Infineon also remains within the index.

Siemens’ year-to-date change is up 25.36% and its revenue for Q2 FY21 is $19.381 billion, a 30.47% increase year-over-year. Its annual revenue for the past four years, starting from 2017, has declined from almost $100 billion to approximately $65 billion.

This downtrend may seem concerning. However, given the way the conglomerate has continued to run with a steady pace and a 4%-plus dividend yield. Compare that to many other companies that do not manage to keep their yield afloat and you have the answer as to why Siemens is still a strong contender in the DAX.

The growth outlook for Siemens and its near-term performance has been noted in the S&P, and still rated at A+, with the following comment for this tier itself: “strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.” 

Proceed With Caution 

There are some good picks to represent the most stable portion of the DAX index. However, some of them have been proven fraudulent. This causes their stocks to fall. Such cases are the Volkswagen Group and Deutsche Bank. 

In Volkswagen’s case, this refers to the 2015 emissions scandal where the company pleaded guilty to three criminal felony courts and paid $4.3 billion in penalties. All of them were in relation to a scheme that lasted from 2008 to 2015 and allowed the carmaker to sell approximately 590,000 vehicles running on diesel in the US by cheating on the compulsory emission tests using a defeat device.

Deutsche Bank’s situation is not that unfamiliar – regulators fined the financial institution several times over instances of financial misdemeanor. This includes rigging the key Libor interest rate, doing business with US-sanctioned nations like Iran and Syria, mis-selling mortgage securities in the US, failure of prevention of money laundering schemes, and lax oversight.

Create Account Try Demo

What’s Next?

Due to the financial misconduct of the German payment processing company Wirecard and the subsequent hit on the index, operator Deutsche Börse announced that a new set of stricter rules will be implemented alongside 10 new companies set to join the DAX from September 2021. 

One of the membership conditions for new members is proven profitability. The current members that fulfill that condition of the GER30 (a common name referring to the DAX) are Germany’s biggest names in business. Amongst them, Volkswagen, SAP, Merck, BMW, Allianz, and Adidas are some of the oldest companies of the DAX. More German-centric businesses like RWE, MTU Aero Engines, Fresenius, Delivery Hero, and Beiersdorf are also active index members.  

Trade the Most Stable DAX Shares with Eightcap

Going long or short on the DAX and consistently securing earnings requires a level of understanding of the financial market’s operations. The open hours of the DAX make it more accessible than other indices, with almost twice the time to trade, at 60 hours a week. The usual trading hours are from 9AM to 5:30PM CET, but the Deutsche Börse also calculates trading out-of-hours  from 8AM to 9AM and 5:30PM to 10PM. 

With its high degree of volatility, there are plenty of opportunities to trade. Some of the factors that impact it are shifts in individual performance, major market events, economic indicator changes, international relations, internal political events, and scandals.

With Eightcap, you can stay on top of market movements and trade with confidence. You can learn more about indices from the Trading Education hub. Register for an account or try a free demo right now. 

Create Account Try Demo

 

Trading on margin is high risk. 

All times are AEDT.