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Dividends boom despite recession and job cuts

The Local · 5 Apr 2010, 17:11

Published: 05 Apr 2010 17:11 GMT+02:00

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The survey of the 30 major companies making up the DAX index, published on Monday by news magazine Der Spiegel, found that the value of dividends have dropped only 12 percent despite a considerably greater plunge in profits.

Deutsche Telekom tops the list of dividend payouts, set to delight its shareholders with €3.4 billion, even though its 2009 profits had plunged to just €353 million, compared with €1.48 billion in 2008. Deutsche Telekom also axed about 4,000 jobs last year – or 3.2 percent of its workforce.

More dramatic still was the steel giant ThyssenKrupp, which reported a loss of €1.8 billion last year and cut 5 percent of its workforce. The firm nevertheless has paid out dividends worth €139 million.

Similarly, heavy vehicle manufacturer MAN lost €258 million and cut 7 percent of its workforce but nevertheless paid out €297 million in dividends.

Car maker Daimler, by contrast, cancelled dividends altogether after losing €2.6 billion and sacking 3 percent of its workers.

Story continues below…

Of the 22 DAX companies that cut jobs in the past year, only nine reduced their dividends or paid out none at all, the survey found. And while more than half the firms reported reduced profits or outright losses, only 12 reduced their dividends.

Thirteen companies paid out the same or higher dividends despite cutting jobs. One of these was Deutsche Bank, which cut 2 percent of its workforce but nevertheless paid out 50 percent higher dividends than the previous year.

The Local (news@thelocal.de)

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Your comments about this article

19:16 April 5, 2010 by cocovelvet
.... it looks like so. They seem to do their level best to keep their dear jobs at the least....
20:25 April 5, 2010 by Hebbellover
Oh, so now we are going back to the marxist way and say profits are immoral?
20:55 April 5, 2010 by dbert4
Gutting the company by paying out more in dividends than the company made in profits? Sounds like they're trying to reward someone unfairly.
00:32 April 6, 2010 by Logic Guy
Well, the free market system would be a wonderful thing, if it were based upon at least a few rules of logic.

When compaines grow so large, to the point to where they effect the lives of many everyday people, then it becomes an issue.

I personally don't have anything against being rich. However, if being rich requires that you to screw over hard-working, middle class folks, then being rich is immoral.
08:15 April 6, 2010 by wenddiver
That is incredibly smart on the companies part. Nothing attracts investors like dividednds, and the more capital you attract from investors the less you have to borrow from Banks. The more capital you have the more of your workforce you can retain in hard times, the more research and development you can do, the more smaller competitors you buy and put to work making mony for your company.

I would be very interested in reading about some sample companies along with their P/E Ratio and what percentage of of German companies are Stock holder equity, are dividends instantly taxabe in Germany or can you roll them over into additional tock and not pay the taxes, until you sell the stock???
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