In it Vonovia-Shares (WKN: A1ML7J), the stock price is still very, very low. As I write these lines, it is at a price level of 36.20 EUR, which is significantly cheaper than weeks and months ago. Of course, this is also due to the dividend deduction. But let’s look at some numbers for comparison.
At the end of November, the share price was still above 52 euros. This means that Vonovia’s shares have lost about 30% of their value since then. It’s not a little. The environment has obviously changed as a result of the Ukraine conflict, the prospect of rising interest rates and rising inflation.
Nevertheless, new insights have been gained with the annual general meeting and some statements from top management. It’s time for me to consider an all-in on Vonovia stock now. Which would mean: to increase the position significantly again.
Vonovia Sharing: Reasons for an All-In!
Due to the falling share price, the Vonovia share is now cheaper. The price-FFO ratio, for example, is below 17, which seems cheap for the defensive class as a residential real estate group. However, it is crucial that management continues to outline positive prospects for the near future.
On the day of the general meeting, Vonovia CEO Rolf Buch said an even higher dividend was expected. The DAX residential real estate group wants to use 70% of the funds from operations for distribution in the future. At the same time, as a result of the acquisition of Deutsche Wohnen, an increase in operating funds of 20% was forecast compared with the previous year. This in turn can enable such growth.
A growing dividend would be a reason for me to increase the price of the Vonovia share. Based on the previously paid EUR 1.66 per. share, the dividend yield would still be almost 4.6%. Add to that a moderate, consistent growth in payouts and we get a dividend of around 5% near or far. These are interesting values for a defensive, timeless residential real estate group.
Especially since a payout percentage of 70% would be a viable basis. And the top management of the Vonovia share promises that dividends will increase due to operational growth. In any case, on that basis I sense solid long-term returns and a good relationship between risk and return.
For me: time for a follow-up purchase
Therefore, I once again take advantage of the cheaper option with the Vonovia share. The defensive class and falling stock price is a blessing in the short term. This makes it possible to get a defensive DAX stock at a low price and with a high dividend. Of course, not everything is perfect, there are also risks, such as the indebtedness in the residential property group. Overall, though, I see the risk-reward ratio as positive at the moment.
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Vincent owns shares in Vonovia. The Motley Fool does not own any of the listed shares.