Yield Comparison Between Federal Bonds and the DAX
The question of whether federal bonds are a competitor to the DAX depends on several factors, particularly the current yield and their attractiveness to investors. Here are some points that play a role:
Yield Comparison
- DAX Dividend Yield: Currently, the DAX dividend yield is only about 0.2 percentage points higher than the yield on ten-year federal bonds. This is a relatively small advantage, as over the past ten years, the yield advantage of DAX payouts averaged 2.5 percentage points.
- Federal Bonds Yield: The yield on ten-year federal bonds recently stood at around 2.51 percent. Analysts expect these yields could remain relatively high due to current economic conditions.
Attractiveness for Investors
- Stability vs. Volatility: Federal bonds are considered a very secure form of investment as they are guaranteed by the Federal Republic of Germany. This can be attractive for risk-averse investors, especially in times of economic uncertainty.
- DAX Volatility: The DAX, on the other hand, is more volatile and offers the possibility of higher returns but also comes with higher risk. Dividend yields vary significantly among companies, with some, such as VW, Mercedes, and BMW, paying over five percent, while others do not pay dividends.
Market Conditions
- Inflation Data and ECB Decisions: Inflation data and decisions by the European Central Bank (ECB) affect the bond markets. An expected interest rate cut could influence bond yields; however, the impact on federal bonds is currently low.
- Trade Conflicts: Global trade conflicts, such as the one between the USA and China, can weigh on the markets and increase the attractiveness of safe investments like federal bonds.
Conclusion
Federal bonds can be attractive for investors seeking safe and stable investments, particularly in times of high economic uncertainty. The small yield difference between DAX dividends and federal bonds could lead investors to reconsider their investment strategy and invest in safer assets. Nevertheless, the DAX remains interesting for investors seeking higher returns and willing to take on more risk.