Dividends as a lifeline: SAP and the future of investors!

Dividends as a lifeline: SAP and the future of investors!

The importance of dividends for investors is growing in a market environment in which stock returns are becoming structurally lower. Goldman Sachs' Katherine Bordlemay highlights that dividends could play a crucial role in stock returns, particularly at a time when many investors are facing stagnant corporate earnings growth rates. In recent years, dividends have only accounted for around 20% of global equity returns following the Covid-19 pandemic, underscoring how important stable payouts have become to the overall performance of equities Focus.

Dividends have traditionally been more important, particularly in international markets such as Europe. Over the last 20 years, dividends have accounted for an impressive 73% of total returns in the MSCI EAFE Index. However, Bordlemay warns against relying solely on high dividend yields. She emphasizes that only sustainable dividends based on solid company fundamentals make sense in the long term.

Stable dividend payers

An example of continuous dividend payers in Germany are SAP and Munich Re, which have never lowered their payouts in the last 25 years and increased them by an average of 12% per year. SAP has seen an increase in value of about 58% over the past 12 months, although the stock's annualized volatility was almost 28%, which is above the market average.

Nevertheless, SAP also achieved a maximum temporary share price loss of over 23% during this time. SAP stock's beta, which stands at 1.15, suggests that the stock has above-average market mobility. A moderate price increase of around 2% is expected for the next four weeks, with the price target being between 251 and 293 euros.

Market development and forecasts

In a changing market, uncertainty is high and analysts agree that paying attention to dividends is highly relevant for investors. The trend towards stable and growing distributions is also reflected in the demand for dividend ETFs. In this context, the IShares MSCI EAFE ETF has made significant dividend distributions, providing investors with important incentives. Sound dividend policies could prove to be the key to hedging risk in volatile times as investors look for stable sources of income.

The above highlights that dividends are likely to become even more important to investors in the future, particularly in the context of lower stock returns and uncertain economic conditions. Investors could benefit from more stable and sustainable returns through wisdom and choice in dividend payments.