Let’s imagine: In September, you as an investor want to invest 1,000 euros in a DAX share for the first time. This is definitely an exciting process that requires a lot of courage. Especially now. The times seem uncertain and unstable.
But this is precisely your advantage: in uncertain times, investors can buy good, long-term and cheap shares, which also applies to the DAX. Maybe you need a little more persistence and courage. But it can still be the first step towards a strong accumulation of wealth.
Back to the topic. If I was faced with this choice, the stock would be Munich Re (NASDAQ:TSO) is my primary pick. Let’s look at the possibility and the possibilities that I see associated with it.
Munich Re: 1,000 euros in this DAX share for the first time in September…?!
In the end, of course, it is your choice which DAX share you want to invest 1,000 euros in for the first time. Or whether September is a good time for you. However, I see Munich Re as a fairly reasonably valued stock with a P/E of around 12 and a dividend yield of 4.4%. Moderate growth in fiscal 2022 could help the price-to-earnings ratio back toward 11 or even lower. As well as increasing the yield.
Additional focus on the qualities. Times can be uncertain for Munich Re shares. Yes, even for the overall economy. But at least the DAX reinsurance does not have to worry about rising interest rates. They even help to improve the investment result, in that the return should again be significantly higher in the future. I see a clear plus in this stock.
Overall, Munich Re’s DAX share is designed for solid quality and returns. A dividend that has not been reduced since 1969 promises a high degree of security in relation to the dividend yield. At the same time, management is enticing with share buybacks, which have resumed this year and may continue in 2022 with a result of 3.3 billion euros. On the other hand, I assess the business model as reinsurance as strong and in any case timeless with a long-term orientation. In short: Munich Re combines many qualities. But above all, a solid business model at a cheap valuation and with prospects for moderate growth.
A solid choice!
No question: Munich Re’s DAX share is not an option that will make you really rich by 1,000 euros in one, three, five, probably not even ten years. For me, however, there is a prospect of a solid return and a good ratio between risk and return. At least that is my thesis and my reason for highlighting this possibility today.
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Vincent owns shares in Munich Re. The Motley Fool does not own any of the stocks listed.