Daimler said in a statement it booked bottom-line net profit of over €6 billion ($8 billion) in 2011, a leap of 29 percent from the previous year.
That would allow the carmaker to increase the dividend payout to shareholders to €2.2 per share compared with €1.85 in 2010.
Employees would also receive a bonus of €4,100 each. Daimler said its underlying profit, as measured by earnings before interest and tax (EBIT), jumped 20 percent to €8.76 billion.
Unit sales were up 11 percent at 2.111 million cars and revenues grew by 9.0 percent to €106.5 billion, the group said.
"We achieved our best-ever results in 2011 for unit sales, revenue, EBIT and net profit. All of our divisions contributed to this success," said Daimler head Dieter Zetsche.
The Mercedes-Benz Cars division has "never performed better than in 2011," and set new records for sales, revenue and underlying profit, he said.
Unit sales of the division's Mercedes-Benz, Maybach and Smart cars rose by 8.2 percent to 1,381,400 vehicles and revenues were up 7.0 percent at €57.4 billion.
The success was primarily due to higher sales, particularly in the mid-sized and SUV (sports utility vehicle) segments, it said. In terms of region, the car division's growth was driven mainly by higher sales in China and the United States.
In the trucks division, unit sales were up 20 percent at 425,800 vehicles and revenues up 20 percent at €28.8 billion, with growth seen in all main regions.
In the fourth quarter alone, group net profit soared 57 percent to €1.79 billion and revenues climbed 10 percent to €29 billion.
Looking ahead to the current year, Daimler said that -- assuming global industry-wide growth of 4.0 percent, driven primarily by emerging markets in Asia -- it expected unit sales to "increase again significantly this year and that revenue will also continue to grow."
In terms of profits, however, underlying earnings were only expected to match last year's level, Daimler said.
Investors appeared satisfied with the record earnings and the prospect of an increased dividend and Daimler shares were the strongest gainer on the Frankfurt stock exchange, climbing 4.84 percent to €46.80.