SAP’s €2.9 Billion Dividend Payout Can’t Mask a Stock That’s Lost a Quarter of Its Value

SAP shareholders get €2.50 dividend on May 8 as payout ratio drops to 40.7%, cloud backlog grows 20%, but stock languishes near €150 with Barclays seeing 45% upside.

SAP shareholders are set to collect a €2.50-per-share dividend on May 8, with the shares trading ex-dividend from May 6. The payout, approved at Tuesday’s virtual annual general meeting, represents a 6.4% increase on last year’s distribution and will cost the Walldorf-based software group roughly €2.9 billion in total.

That headline figure, however, masks a notable shift in the company’s payout policy. The dividend equates to a payout ratio of 40.7% of non-IFRS net profit — bang on the lower end of SAP’s self-imposed target of at least 40%. A year ago, that ratio stood at 52%, underscoring how the group is prioritising reinvestment over shareholder returns even as it hands investors more cash in absolute terms.

The AGM also addressed succession planning at the top of the supervisory board. René Obermann, who chairs Airbus’s supervisory board and serves as chairman Europe at private equity firm Warburg Pincus, has been nominated to succeed Pekka Ala-Pietilä as chairman when the latter steps down in 2027. Shareholders additionally voted on a proposal to authorise the issuance of convertible and warrant bonds with a total nominal value of up to €10 billion.

Cloud momentum remains the bedrock

The dividend increase rests on a solid first-quarter performance. SAP’s current cloud backlog swelled 20% to €21.9 billion, while cloud revenues climbed 27% on a currency-adjusted basis. For the full year, management is targeting cloud sales of between €25.8 billion and €26.2 billion, implying growth of 23% to 25% at constant currencies.

Yet the tone from the C-suite on near-term prospects is more measured. After a strong start to the year, the board has flagged a slight deceleration in cloud growth for the second quarter, partly because positive one-off effects that boosted the first quarter will not repeat. The group still expects to generate free cash flow of around €10 billion for the full financial year.

Alongside the dividend, SAP is ploughing ahead with a multi-billion-euro share buyback programme. The first tranche was completed in early April, and the company intends to repurchase up to €10 billion worth of its own stock by the end of 2027.

Barclays sees a 45% rebound — but the chart tells a different story

The stock has been a brutal performer in 2026. Since January, SAP shares have shed roughly 26% of their value, trading at around €150 — a far cry from the 52-week high of €271.60. Repeated attempts to break through the €150 resistance level have fizzled, leaving the stock well below its peak.

Barclays analyst Sven Merkt is betting on a reversal. He reiterated an “Overweight” rating on Tuesday with a price target of €220, implying upside of nearly 45% from current levels. Merkt pointed to the recent acquisitions of Dremio and Prior Labs as strengthening SAP’s technological foundation for AI agents, even if those investments will take years to show up in the profit and loss account.

The British bank’s optimism dovetails with SAP’s own narrative of positioning itself as a leader in autonomous enterprise software. Management has been showcasing logistics solutions at the Gartner Supply Chain Symposium, and the company’s AI assistant Joule is now embedded in dozens of SAP products.

Orlando looms as the next catalyst

Technically, the picture has brightened marginally. The stock ticked up on Tuesday and has managed to cross above its 20-day moving average — a short-term bullish signal. But a relative strength index reading of nearly 76 warns that the shares are approaching overbought territory, leaving them vulnerable to profit-taking.

The next major catalyst is the SAP Sapphire conference in Orlando, scheduled for next week. Investor relations will host a financial analyst event featuring board presentations and a Q&A session. Concrete strategic announcements there could provide the directional push that strong quarterly numbers alone have so far failed to deliver.