What is the correct course of action in this situation?

You answered correctly by choosing to stop and allow the person to cross the road. According to German traffic rules, drivers must always give way to pedestrians who are about to cross the street, especially when it is clear they intend to do so, such as this person waiting at the curb with a guide dog. Safety and caution are especially important around people with disabilities. Flashing headlights or driving around the pedestrian would be unsafe and is not permitted. Always stop and let pedestrians cross to ensure their safety. This approach helps you handle similar situations correctly in the future.