An insightful look at Nike Inc's dividend history, growth, and future prospects based on GuruFocus data
Nike Inc(NKE, Financial) recently announced a dividend of $0.34 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-01. 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 deep dive 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 26 years.
Breaking Down Nike Inc's Dividend Yield and Growth
As of today, Nike Inc currently has a 12-month trailing dividend yield of 1.29% and a 12-month forward dividend yield of 1.33%. This suggests an expectation of increase 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%.
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 2023-05-31, 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 10 out of 10 as of 2023-05-31, suggesting good profitability prospects. The company has reported positive net income for each of 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 10 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 than approximately 75.27% 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 than approximately 66.88% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 22.50%, which outperforms than approximately 75.16% of global competitors.
Next Steps
Given Nike Inc's consistent dividend payments, impressive growth rate, reasonable payout ratio, high profitability, and strong growth metrics, it appears to be a promising investment for dividend investors. However, investors should continue to monitor these factors over time to ensure the company's ability to maintain its dividend performance. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
