Mercedes-Benz, formerly known as Daimler, is a German Xetra-listed global automotive company with a market capitalisation of EUR57 billion ($86 billion). The company operates three main segments, which are cars, vans, and mobility, which collectively make up the Mercedes-Benz Group. The cars segment contributes the most to the group’s revenue, accounting for over 70%, and includes entry-level, core, top-end, and electric vehicles. The vans segment accounts for over 10% of total revenue and includes commercial, private, and EV vans. The mobility segment accounts for the remaining revenue and includes financial services such as leasing and insurance, as well as sales support and mobility solutions.
Certain industries in the stock market are considered safer investments simply because of the nature of their business. Across industries, mature companies are generally safer investments, as they are likely to have a stable track record and business. This comes at the cost of slower growth and potentially lower investment returns. For an investor seeking regular, consistent dividends, targeting these companies may be a strategic option, though it is not guaranteed. For this type of investor, growth is important only if dividend yields are not attractive enough, because they would be better off targeting higher-growth companies that, on average, pay higher dividends when held over the long term.
The company in focus will be Mercedes-Benz Group. Relative to the German DAX index, Mercedes-Benz’s monthly one-year, three-year, five-year, and 10-year betas are 0.60, 1.08, 1.00 and 1.21, respectively. This indicates that the company has been mostly volatile over these periods, since beta measures a stock’s volatility relative to the overall market. This is particularly good for a company pursuing a growth strategy, as volatility is important for investors to realise their investment goals. For dividend-based investors, however, they need to be more active in managing their stock positions, with dividend yields as the primary reference. Regardless of volatility, if a company can pay and grow dividends through every business cycle, it is a good company to invest in for dividend-based investors.
