Vonovia focuses on expansion
For the shareholders of the Vonovia Group, the current expansion strategy represents the right approach. The acquisition of the direct competitor Buwog is also an aspect of expansion. Overall, the company wants to pay 334 million euros to the shareholders of Buwog and thus advise a takeover.
For investors, the high dividend payout is an interesting framework for an investment. The dividend yield amounts to 3.1 percent. In 2017, the company distributed EUR 1.32 per share. The current payout ratio of 69.5 percent also leaves enough room for dividend increases. According to analysts, investors can expect a dividend increase to 1.40 euros in the coming year. For some investors, the payout ratio is an obstacle to investing. However, unlike a traditional industrial group, real estate companies calculate their dividend payments on the FFO (Funds From Operations). This value serves as an indicator for calculating the income from the rental business. In total, Vonovia will thus receive 70 percent of the regular income directly to its shareholders. The remainder of the FFO will be used to buy new homes and renovate existing homes.
Vonovia's business model is particularly successful
The Group has been pursuing the current investment and distribution model for several years. In the period between 2013 and 2017 alone, the company was able to double the FFO. Capital was always sufficient for excessive expansion and increased corporate profits.
Another advantage of the company is the market in which Vonovia operates. The real estate market will continue to exist in the future and tenants will ensure a secure and sustainable flow of capital. In addition, the company relies on apartments in prime locations that benefit from a high rent increase. In competition Vonovia can stand out from the competition. The group is the largest real estate company in Germany. This results in an outstanding negotiating position towards suppliers and service providers. The corporate strategy points to a long-term orientation of the management, as the customer is the focus of the strategy. Above all, a comparison with direct competitors reveals that such a customer orientation is not part of the industry standard.
Overall, the stock can convince as a dividend. An analysis of the company figures reveals that this property is a reliable dividend payer with a good development outlook.