Nike (NYSE:NKE), a global leader in athletic footwear and apparel, has announced a significant update that bolsters its attractiveness to investors. The company declared a 9% increase in its quarterly dividend last week, a move that underscores its financial strength and commitment to shareholder returns.
This dividend hike marks a continuation of consistent dividend growth investors have come to expect from the stock. This is the 22nd straight year that the company has raised its payouts. The new quarterly payment of $0.37 means that the stock is now yielding 1.4%, which is slightly less than the S&P 500 average of 1.6%.
Nike's decision to boost its dividend comes amidst a complex global economic landscape. However, it reflects the company's robust financial position, powered by a strong brand presence and a widespread global footprint. The company has maintained a resilient performance, even in challenging market conditions, a testament to its brand power and operational efficiency.
Over the trailing 12 months, the company has posted a profit of $5.1 billion on revenue of $51.5 billion, for a profit margin of 10%. With its strong financials, the stock has a modest payout ratio of 42%, leaving plenty of room for the company to make more rate hikes in the future.
This year hasn’t been a great one for Nike as the apparel stock is down 8%. But over the past decade, it has risen by more than 170%, which is a better performance than the S&P’s 150% increase over the same stretch. For long-term dividend investors, Nike can make for an excellent stock to buy and hold given its solid financials and strong brand.
