Unpacking the Dividend Profile of a Sporting Giant
Nike Inc (NKE, Financial) recently announced a dividend of $0.37 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-01. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Nike Inc's dividend performance and assess its sustainability.
What Does Nike Inc Do?
Nike is the largest athletic footwear and apparel brand in the world. Key categories include basketball, running, and football (soccer). Footwear generates about two-thirds of its sales. Its brands include Nike, Jordan, and Converse (casual footwear). Nike sells products worldwide through company-owned stores, franchised stores, and third-party retailers. The firm also operates e-commerce platforms in more than 40 countries. Nearly all its production is outsourced to contract manufacturers in more than 30 countries. Nike was founded in 1964 and is based in Beaverton, Oregon.
A Glimpse at Nike Inc's Dividend History
Nike Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Nike Inc has increased its dividend each year since 1997. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 27 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nike Inc's Dividend Yield and Growth
As of today, Nike Inc currently has a 12-month trailing dividend yield of 1.33% and a 12-month forward dividend yield of 1.43%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Nike Inc's annual dividend growth rate was 11.50%. Extended to a five-year horizon, this rate decreased to 11.30% per year. And over the past decade, Nike Inc's annual dividends per share growth rate stands at an impressive 12.40%.
Based on Nike Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Nike Inc stock as of today is approximately 2.27%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-11-30, Nike Inc's dividend payout ratio is 0.41.
Nike Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nike Inc's profitability 9 out of 10 as of 2023-11-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Nike Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Nike Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nike Inc's revenue has increased by approximately 11.60% per year on average, a rate that outperforms approximately 73.29% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Nike Inc's earnings increased by approximately 26.40% per year on average, a rate that outperforms approximately 67.59% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 22.50%, which outperforms approximately 74.95% of global competitors.
Looking Ahead: Nike Inc's Dividend Prowess
Considering Nike Inc's consistent dividend increases, a solid payout ratio, and robust profitability and growth metrics, the company's dividend payments appear sustainable in the foreseeable future. The blend of a strong competitive position in the athletic apparel industry, combined with strategic initiatives for growth, positions Nike Inc favorably among dividend-seeking investors. With these factors in mind, one might ponder, will Nike Inc continue to outpace inflation and provide investors with a growing income stream?
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
