JuniorDepot 3 – Buying DAX Dividend-Cows

Elle, a 7 years old girl learning to manage her wealth on her own, made her second investment. We used recent market correction to buy an ETF on DivDAX, which consists of the 15 DAX stocks with the highest dividend yield (and mostly low p/e).

Elle's second investment was much easier than the first one. Elle has learnt that in long term the indices normally do grow (yes, we have shown her the counter-example of NIKKEI). So we decided to use the recent market correction to make our first investment in DAX. And again we have encountered the problem that €108,07 (€100 monthly saving + €8.07 cash residual from the previous investment) was insufficient to purchase even a single share of a DAX-ETF. Fortunately, there are ETFs on the DivDAX®, which consists of 15 DAX stocks with the best dividend-yields.  Currently these are as follows:

Company Sector P/E DivYield
ALLIANZ Insurance 11,49 4,34 %
BASF Chemistry 13,98 3,60 %
BAYER Chemistry & Pharma 14,30 2,88 %
BMW Automotive 8,20 4,21 %
Daimler Automotive 7,65 5,04 %
DEUTSCHE BOERSE Financial 19,64 2,60 %
DEUTSCHE LUFTHANSA Transport 6,44 2,67 %
DEUTSCHE POST Transport 15,26 3,22 %
DEUTSCHE TELEKOM Communication 13,81 5,21 %
E.ON Energy 13,07 5,34 %
LINDE AG O.N. Z.UMT. Industrial gases 20,49 2,40 %
Münchener Rück Insurance 11,43 4,80 %
PROSIEBEN MEDIA Media 12,51 6,66 %
Siemens Machinery 15,24 3,31 %
Vonovia SE Real Estate 14,54 3,74 %
P/E and DivYield data are the forecasts for 2018 from comdirect.
Note that it is pretty hard to find precise fundamental data, just compare the numbers from, e.g. finanzen.net and boersengefluester.de

As to stock weights, they are not equal but surprisingly little known about them, even Frankfurt Stock Exchange didn't care to specify them. Well, since Elle does not have a good command of fractions,  we simplify the problem and assume the equals weights. Then we have mean P/E = 13.2 (which is relatively low) and mean DivYield=4% (which is pretty high).



Finally, we did a quick chart analysis of the constituents. Elle already knows that technical analysis is rather a voodoo craft than a science (it is prematurely talk to her about backtesting) but trying to recognize the trends and support-resistance levels at the charts is a good exercise for girl's visual perception.

Statement of account

Date Product ISIN Description FX Cashflow Balance
26-01-2018 COMSTAGE-DIVDAX UCITS ETF LU0603933895 Purchase 3 at 31,52 EUR -94,56 € 13,51 €
01-02-2018 Monthly Saving EUR 100,00 € 108,07 €

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Like this post and wanna learn more? Have a look at Knowledge rather than Hope: A Book for Retail Investors and Mathematical Finance Students

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