Is Nike a Buy After Its Impressive 11% Dividend Increase?

Last week, footwear and apparel company Nike (NYSE:NKE) announced that it was raising its dividend payments for the 21st consecutive year.

At $0.34, the new dividend will be 11% higher than what Nike was paying previously ($0.305). Shareholders will receive the dividend on Dec. 28. Over a period of five years, the company has increased its dividend by 70% from the $0.20 it was paying at the start of 2018. That averages out to a compounded annual growth rate of 11% -- right in line with the company's recent hike. If Nike continues making increases at that pace, then it would take about seven years for investors to see their payouts double.

With the increase, Nike's dividend is now yielding 1.3%, which is lower than the S&P 500 average of 1.7%. But if the company continues to grow its payouts at such a high rate, investors could still come out with some better returns than they would from holding the broad index. Plus, with shares of Nike down 37% this year, the stock may be a good buy on the dip and potentially lead to gains in the long run as well.

The company has been doing well despite some challenging macroeconomic conditions. When it last reported earnings in September, the company's sales totaled $12.7 billion and rose 4% year over year. And if not for the impact of foreign exchange, the increase would be 10%.

For long-term investors, now could be an opportune time to invest in the company as its strong dividend increase suggests that management is confident in its operations despite inflation.