For decades, Nike (NKE -4.03%) has operated as a leader in the global market for sports footwear and apparel. But that winning position has come under fire in recent years. The brand known for inspiring, empowering, and motivating its customers has failed at doing just that for its investors. As of Aug. 14, shares trade 77% below their peak from November 2021.
It’s hard to get excited about the company’s prospects when it’s in the middle of a multi-year turnaround in an intensely competitive industry. However, the consumer discretionary stock might pique the interest of investors seeking a nice income stream they can depend on.
Nike currently boasts a dividend yield of 4%. And the business is on track to make 2026 the 25th straight year that the quarterly payout will be raised.
Image source: The Motley Fool.
Taking care of shareholders through the ups and downs
Last November, Nike raised its dividend payout for the 24th consecutive year. It bumped the quarterly distribution to $0.41 per share, which equates to $1.64 on an annualized basis. Since the share price has cratered, the yield has gotten a boost. Compared with the S&P 500 index’s 1.03% dividend yield, the sportswear giant offers investors nearly four times the cash return.
It’s likely that another hike will be announced later this year. Historically, Nike has implemented a dividend payout increase in November. If the trend continues, the business will officially be recognized as a Dividend Aristocrat®, a group of S&P 500 companies that have a 25-year (or longer) dividend-raise streak alive.
It’s easy to consistently increase the dividend when financial performance is stellar, as profits and free cash flow should support capital returns. It’s impressive when businesses do this. It’s even more remarkable, on the other hand, to see Nike’s leadership team remain committed to shareholders during a multi-year stretch of notable headwinds and relentless competitive pressures.
After 32-year Nike veteran Elliott Hill took the CEO position in October 2024, management has made efforts to improve product innovation and freshness, right-size distribution to balance wholesale and direct-to-consumer channels, and bolster the brand, all while bringing sports back into the center of the strategy. But progress is taking time. The share price has tanked 50% since Hill took over.
In the past three fiscal years, though, Nike has paid $6.9 billion in cumulative dividends. This is a notable sum that’s equal to 11% of the company’s market capitalization.
Today’s Change
(-4.03%) $-1.64
Current Price
$39.09
Key Data Points
Market Cap
Day’s Range
$38.86 – $40.60
52wk Range
$38.86 – $80.17
Volume
283.4K
Avg Vol
24.1M
Gross Margin
43.14%
Dividend Yield
4.17%
Passive income for investors bullish on Nike
Nike’s revenue is projected to fall 1.5% in fiscal 2027 on a year-over-year basis. Over the next two years, this key financial metric is expected to grow by less than 4% annually. These estimates are based on consensus figures from the sell-side analyst community.
This outlook makes it extremely difficult to be bullish on Nike and view it as a compelling portfolio addition right now. That perspective is supported by the stock’s precipitous decline.
However, it wouldn’t be surprising to learn that some investors are still optimistic. After all, this is one of the world’s most recognizable consumer brands. This introduces an invaluable intangible asset that Nike’s peers don’t have.
And now that it appears the company’s financial performance has stabilized, there’s less risk that the dividend streak will be disrupted. Nike reported $3.1 billion in net profit in fiscal 2026, and it has $9 billion in cash, cash equivalents, and short-term investments on its balance sheet.
If you’re bullish on Nike’s ability to return to healthy and sustainable revenue and earnings growth sooner rather than later, this setup is interesting, particularly given that the price-to-earnings ratio is near a 10-year low. Of course, your patience will be tested. But you can sit back, relax, and earn a 4% dividend yield while you wait for the business to improve, which could take longer than expected.
