Mercedes-Benz Shares Jump After Higher Dividend, Buyback Program

By David Sachs

Mercedes-Benz Group shares traded higher Thursday after the company raised its dividend and expanded its buyback program despite warning of lower earnings this year.

At 0825 GMT, shares in the German luxury-vehicle maker were up 5.3% to EUR71.67 after rising as high as EUR71.71.

Mercedes said late Wednesday that it would expand its buyback program by 3 billion euros ($3.25 billion) and on Thursday said it aims to raise its dividend to EUR5.30 per share from EUR5.20 in 2022.

The company met its 2023 financial targets after a slower fourth quarter, but warned of lower earnings and profitability expectations this year amid geopolitical and macroeconomic uncertainty.

"With the volume guidance also flat for the year, and margins lower, investors would probably appreciate a significantly accelerated share buyback to offset lower organic earnings," Bernstein analysts said in a note.

The premium-car maker also set a new buyback policy that will first allocate cash from industrial operations to a dividend of around 40% and smaller mergers and acquisitions, after which all leftover cash will go toward buying up and redeeming its own shares.

"MBG announced a new policy for cash returns that in our view is both bold and coherent with the group's pitch for a more luxury investment case underpinned by stable cash generation," Jefferies analysts said in a note.

Write to David Sachs at david.sachs@wsj.com

(END) Dow Jones Newswires

February 22, 2024 03:44 ET (08:44 GMT)

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