Should investors offload their shares in Allianz and BASF after the recent price surge, or should they continue to reap high dividends?
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Investors in Allianz and BASF stocks may find a compelling case for holding due to ongoing positive factors.
Analysts at DZ Bank positively assess the ongoing efficiency programs at BASF and expect a global cyclical recovery, leading them to set a new target price of 58 euros for BASF stock and recommend buying it. The German chemical giant's management plans to regularly spend billions on share buybacks, and the stock has risen by 21 percent since early August.
Recent market volatility notwithstanding, experts forecast the BASF stock's dividend at 6.34 percent and the P/E ratio for next year at 11.8. Despite a potential reduction in the dividend, the minimum dividend for BASF stock has been set at 2.25 euros per share.
Allianz, on the other hand, continues to present a rosy medium-term outlook. Goldman Sachs has set a target price of 349 euros for Allianz stock and recommends buying it. The business model of Allianz offers investors protection against downside risks, and the company's asset management benefits from a looser monetary policy. The Allianz stock has risen by around 25 percent since early August, with a dividend yield of 5.41 percent.
Both companies are part of a wider German industrial and economic stimulus, with BASF among 29 DAX firms pledging over €630 billion in investments by 2028, which may boost competitiveness and innovation. However, the broader German market faces some headwinds. The DAX index shows recent weaknesses, and geopolitical or economic concerns impacting stock prices, including Allianz being down slightly in the latest session.
Some analysts see limited upside and have downgraded certain German stocks due to valuation concerns, which could apply to Allianz or related sectors. After the initial negative reaction to the dividend announcement, the BASF stock gained significantly in the following days, suggesting that the market may have overreacted.
Investors should remain alert to market volatility and regularly review company performance and macroeconomic factors. Selling might be considered if investor risk tolerance is low or if new negative news emerges. However, the long-term outlook for both Allianz and BASF remains promising, with Allianz's forecasted long-term price increase predicting a rise from about €373 in August 2025 to over €580 by 2030.
Both companies benefit from a robust ESG profile, with BASF leading in water management and climate assessments, signaling strong governance and sustainability practices that can support long-term stability. The recent jump above the 200-day line for BASF stock indicates a new uptrend, and investors can continue to buy and add to their positions in BASF as long as the stock is above the 200-day line.
In conclusion, both BASF and Allianz currently offer nice price gains and substantial dividends, making them attractive investment options for those seeking long-term growth and income.
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