We recently published a list of 10 Best Annual Dividend Stocks To Buy Now. In this article, we are going to take a look at where SAP SE (NYSE:SAP) stands against other best annual dividend stocks to buy now.
In 2025, dividends in MSCI Europe are expected to reach a record high. According to Allianz Global Investors, these firms are likely to increase dividend payouts by 4% year-over-year to €459 billion, up from €440 billion in 2024. In 2026, MSCI Europe dividends could catapult even higher to €496 billion. In Germany alone, payouts are projected to rise from €57 billion in 2024 to €63 billion in 2025, and possibly hit €70 billion in 2026. Allianz Global expects the Tech and Healthcare sectors to offer the highest dividend increases in 2025, while the Energy sector could likely create some weakness. The Financials sector will remain the biggest dividend contributor in Europe. Dividend yields are staying ahead of long-term German government bond yields as well, with the MSCI Europe dividend yield expected to be 3.5% this year.
Over the last 40 years, about 39% of MSCI Europe’s total annualized return resulted from dividends. Comparatively, dividend payouts made up 22% of total returns in MSCI North America and just over 41% in MSCI Pacific.
Jenny Harrington, CNBC Halftime Report’s go-to expert on dividends, observed that the broader market’s dividends have grown about 5.7% in the last 50-60 years, which means that dividend income is outpacing inflation. She also noted that dividends are a tax-advantaged income stream, which is a huge plus. Harrington also commented that dividend investors are more likely to hold their portfolios rather than selling in a panic when markets go down. They are reluctant to give up their income streams and risk wasting years of effort, which helps keep dividend portfolios steady and resilient, even during market selloffs.
Harrington also told investors that some companies may not have strong growth potential but generate high free cash flow, allowing them to pay dividends. However, those seeking high-growth stocks should carefully balance their portfolios. Harrington advised investors to explore opportunities beyond the broader market, as the index is heavily dominated by its top 10 stocks. She suggested that looking at other companies, including dividend stocks, could offer better value and growth potential. Given this, we will now take a look at some of the best annual dividend stocks.
Our Methodology
For this article, we manually researched annual reports and company websites to see which stocks pay dividends annually. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in the ascending order of dividend yield as of February 6.
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A data centre room with cloud technology, illustrating the enterprise application software services.
SAP SE (NYSE:SAP)
Dividend Yield as of February 6: 0.87%
Number of Hedge Fund Holders: 36
SAP SE (NYSE:SAP) is a provider of applications and technology for enterprise resource planning, HR management, and spend management solutions. Founded in 1972, the company is headquartered in Walldorf, Germany. For 2025, it raised the operating profit guidance from €10.2 billion to €10.3-€10.6 billion. SAP CEO Dominik Asam believes that the company remains on track to outperform in 2025 too, given that it already over-delivered in 2024, achieving the targets set for 2025 too. In the past 12 months, the stock has surged nearly 65%.
In Q4 2024, SAP SE (NYSE:SAP) total cloud backlog increased 40% year-over-year, equalling €63 billion. The company’s cloud revenue grew 27%, resulting in a double-digit revenue increase for three straight quarters. The company went the extra mile on its commitments to customers this year, providing 130 use cases for generative AI in 2024. Free cash flow in 2024 exceeded the prior guidance of €3.5 billion to €4 billion, increasing 19% year-over-year to €4.1 billion. SAP absorbed €2.5 billion in restructuring payouts and €0.2 billion in compliance-related settlements. However, the company also received a few hundred million in receivables due in 2025, and combined with robust profitability, it led to strong free cash flow for the year.
On May 15, 2024, SAP SE (NYSE:SAP) announced an annual dividend of $2.385 per share dividend. The dividend was paid on May 28, 2024. It is one of the best dividend stocks to monitor.
According to Insider Monkey’s third-quarter data, 36 hedge funds tracked by Insider Monkey held stakes in SAP SE (NYSE:SAP), up from 31 funds in the prior quarter. Billionaire Ken Fisher’s Fisher Asset Management is the largest position holder in the company, with 4.7 million shares worth over $1 billion.
Overall, SAP ranks 10th on our list of best annual dividend stocks to buy now. Overall, SAP ranks first on our list of the best annual dividend stocks. While we acknowledge the potential of SAP to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MBG.DE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
