Shares of Mercedes-Benz Group traded higher on Thursday as the company announced an increase in dividends and an expansion of its buyback program. Despite warning of lower earnings for the year, investors seemed optimistic about the news.

Key Updates

  • Shares in the German luxury-vehicle maker saw a 5.3% jump to EUR71.67, reaching as high as EUR71.71.
  • Mercedes revealed plans to expand its buyback program by 3 billion euros ($3.25 billion) and raise its dividend to EUR5.30 per share from EUR5.20 in 2022.
  • The company achieved its 2023 financial targets following a slower fourth quarter but cautioned about lower earnings and profitability expectations for the current year due to geopolitical and macroeconomic uncertainties.

Analyst Insights

  • Bernstein analysts noted that with flat volume guidance and lower margins for the year, an accelerated share buyback could help offset the decline in organic earnings.
  • Jefferies analysts praised Mercedes' new cash return policy, which prioritizes dividends and strategic investments before allocating excess cash to share buybacks.

Overall, Mercedes-Benz Group's strategic moves aim to enhance its appeal as a luxury investment opportunity backed by stable cash generation.

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