Dividend stocks put to the test: 3 stocks with which I have had good experiences.

„Dividende gut, alles gut.“ Dies war mein Mantra zu Beginn meiner Investorenlaufbahn. Entsprechend kaufte ich gerne Aktien mit hohen Dividendenrenditen und vernachlässigte dabei die entscheidenden operativen Aussichten der dahinterstehenden Unternehmen. Das passiert mir heute nicht mehr. Die folgenden drei Aktien verkaufte ich daher in den letzten Jahren und bin mit dieser Entscheidung bisher gut gefahren. Denn die langjährige Gesamtrendite (Kursentwicklung plus Dividenden) liegt bei allen drei Aktien hinter dem breiten Aktienmarkt.

Despite its 6.2% dividend yield, dividend king 3M is not for me

26% price decline over a ten-year period (as of all information: November 17, 2023) This number makes it clear that things have not been going well for the US industrial group 3M (WKN: 851745) for a long time. Even when factoring in 64 years of steadily increasing dividends, 3M's total return is well behind the S&P 500 (which has increased 150% in the last decade).

Dividend share Allianz: Solid underperformance

For me, Allianz shares (WKN: 840400) are a typical example of a dividend share that is popular with private investors and consistently lags behind the market. The insurance business may be solid, the dividend may seem attractive with a dividend yield of 5.0% and average dividend increases of 10% in recent years.

A turnaround at Unilever seems unlikely to me

The third dividend stock that is no longer in my portfolio today is Unilever (WKN: A0JNE2). The consumer goods business with well-known brands such as Knorr, Magnum, Langnese, Dove and Domestos appears safe and familiar. Furthermore, more than half of sales are generated in emerging countries.

The reason for the dividend stock's poor performance is quickly found. The business of selling post-its, stethoscopes, lubricants, wire ropes and thousands of other products is more or less stagnating. Since 2013, sales have only increased by 10%. At the same time, high debts are putting pressure on earnings. Billions in fines imposed in connection with water pollution and defective hearing protectors will place additional strain on the company in the coming years.

An operational turnaround therefore seems unlikely to me. Despite the high dividend yield of 6.2% and the cheap P/E ratio of 9 on paper, I'm staying away from 3M shares. I have no regrets about selling in 2022.

However, when it comes to individual investments, I expect long-term outperformance of the broader market. Otherwise I could simply buy a market-wide ETF. And Allianz shares do not meet this requirement in the long term. The total return (including dividends) has been below that of the S&P 500 over the last ten and twenty years.

I see little reason why developments should be better in the next ten years. On the contrary. The mix of increasing competition from insurtechs, increased price pressure due to greater use of online comparison portals and comparatively high internal (administrative) costs could put a strain on business. Therefore, I sold my shares in 2020.

Nevertheless, Unilever – similar to 3M – is hardly growing. From 2012 to 2022, sales increased by just 17%. Profit grew at more or less similar rates through 2021 and only increased significantly in 2022 - due to the tailwind of higher enforceable prices due to inflation. It can already be seen in the current financial year that this effect is unlikely to continue. As prices continue to rise, the volume of goods sold falls. Things can't go on like this.