Dividends and Dollars from Markgrafave through Istock
Usually, corporate dividends and high dividends do not make a good combo, as one of the ways in which companies are trying to “turn” their business is by reducing costs, and sometimes it means reducing dividends while trying to reduce their cash flows.
In addition, the reason why the company should “turn” first is that it does not perform well financially, which means that the dividend can be at risk of being shortened or stopped completely.
However, I believe that Nike is a stock that fits into the category of dividend stock. The action has a dividend yield of over 2%, and although this has fallen from the maximum in 2025, against the background of nearly 20% NKE’s shares over the last month, it still looks like a purchase. Let’s discuss this in perspective, starting with the dividend of the company.
www, barchart.com
While some companies have a well -documented dividend policy, Nike does not have a requested payment policy. However, he has increased his dividends for 23 consecutive years and seems to be about to become a dividend aristocrat. The company increased its dividends even during the 2008 global financial crisis and the Covid-19 pandemic in 2020. Although its profits have struck in the last quarters, the company has increased its quarterly dividend by 8% to $ 0.40 in December 2024.
Dividends have grown at a complex annual growth rate (CAGR) of 10.3% in the last five years, while Cagr for the last 10 years is just over 11%. This seems like a pretty decent growth and I have no reason to believe that the company will soon reduce its dividend. Nike’s current dividend yield is about 2.1%, which, although not in the mouth, is much larger than 1.3%that the average composition of the S&P 500 ($ SPX) index pays.
In the meantime, while Nike has a healthy dividend yield, payment should not be the only reason for the purchase of the action, as it is a greater part of its return does not come from dividends. Nike investors should expect the bigger part of their return on capital appreciation, so it is wise to look at the stock forecast.
While numerous brokers, including Goldman Sachs, Piper Sandler, Citigroup, HSBC, Barclays and Baird, raised the target price of Nike after the fiscal profit of the Q4 2025 last month, the shares traded at an almost average target price of $ 76.63. However, the target street price of $ 120 is 56.8% higher than the closing price on July 7.
The action has a consensus rating of “moderate purchase” from 36 analysts covering the shares, but in the last two weeks it has won upgrades from HSBC and Argus.
www.barchart.com
Nike is an emblematic brand. However, he has lost some of his splendor because of his relative lack of innovation. Moreover, the company lost to established brands such as Adidas (Addyy), as well as more new brands such as New Balance, Hoka (Deck) and Running (ONON), as a solution to reduce wholesale sales sales and only helped competitors to win the raft space, which ultimately provides more and big as long as they would have.
Nike reverses some of its policies and has now doubled in third -party sellers. He also started selling to Amazon (AMZN) after leaving the 2019 e -commerce platform.
It is worth noting here that Nike has turned from third -party sellers for a reason. Having its own channels gives the company more control and helps it better to contact customers. Moreover, rotation helped Nike expand its gross margins. However, soon enough, the strategy affected Nike’s sales, as its products were not stocking by many third -party sellers.
www.barchart.com
As Nike begins to focus on third-party sellers, he may not be able to enjoy the type of margins he made in his peak in early 2022. However, the company now has a bilateral strategy where it intends to use its direct channel for first-class products, which will be higher.
The company’s turn shows results and it must soon be returned to the top of the top line with stable margins. The cost-related costs have been winds in the last few quarters, but during the fiscal call for a profit of Q4 2025, Finance Officer Matt said the quarter “reflects the biggest financial impact” of its winning plan now. The company expects the pressure on the top line and the margins to start moderation, but sees another 75-basic point of the margin that affects this fiscal year.
In the meantime, China remains a structural wind for Nike as the market does not grow as fast as before, but Chinese consumers are increasingly preferring local brands against US rivals.
All of the above, I believe that Nike’s turn is progressing in the right direction and the shares can fit into portfolios of dividend investors who thirst for a mix of both dividend growth and capital appreciation in the medium and long term.
On the date of publication, Mohit Obera had a position in: nke, amzn. All information and data in this article are for information purposes solely. This article was originally published on barchart.com
