What is the right course of action?

At a stop sign, you must come to a complete stop at the stop line. In this scenario, it's crucial to wait at the stop line before proceeding. Additionally, if there is a cyclist approaching, the law mandates that you must allow them to pass before making any turn.

The combination of actions you selected—waiting at the stop line and allowing the cyclist to pass—is correct according to German traffic rules. This is important for ensuring the safety of all road users. Making a turn in front of a cyclist without yielding could lead to dangerous situations and is not permitted. Always prioritize the right of way for cyclists when you encounter them.