Is NIKE, Inc. (NKE) the Best Dividend Stock According to Wall Street Analysts?

NIKE, Inc. (NKE) has long been a favorite among dividend investors, thanks to its consistent dividend payouts and growth. But is it the best dividend stock according to Wall Street analysts? Let's examine the data and expert opinions to find out.



Dividend History and Growth

NIKE has a strong track record of increasing its dividend annually. The company's dividend has grown at an average annual rate of 10.33% over the past 3 years, which is higher than the average dividend growth rate of 7.5% for the Dow Jones index. Additionally, NIKE's dividend payout ratio is 35.7%, which is higher than the average payout ratio of 30% for the Dow Jones index. This indicates that NIKE is paying out a larger portion of its earnings as dividends compared to other stocks in the index.



Dividend Yield and Payout Ratio

NIKE's current dividend yield is 2.33%, which is lower than the average dividend yield of 3.5% for the Dow Jones index. However, NIKE's dividend payout ratio is 35.7%, which is higher than the average payout ratio of 30% for the Dow Jones index. This means that NIKE is paying out a larger portion of its earnings as dividends compared to other stocks in the index.

Analyst Ratings and Price Targets

As of February 6, 2025, 32 analysts have an average rating of "Buy" for NIKE, with a 12-month price target of $91.3, which is an increase of 32.72% from the latest price. This positive sentiment from analysts suggests that NIKE is well-positioned to continue paying and potentially increasing its dividends in the future.



Earnings Growth and Free Cash Flow

NIKE's earnings have been growing, with a 5-year EPS CAGR of 9.95%. Additionally, NIKE's free cash flow has been growing, with a 5-year CAGR of 5.30%. A strong free cash flow indicates that the company has sufficient cash to cover its dividend payments and other obligations.

Debt Levels and Balance Sheet

NIKE has a relatively low debt-to-equity ratio of 0.34, indicating a strong balance sheet. High debt levels can increase the risk of dividend cuts, as the company may need to redirect cash flow to service its debt obligations. NIKE's low debt levels suggest that the company is well-positioned to maintain its dividend payouts.

Analyst Opinions on NIKE as a Dividend Stock

Several analysts have weighed in on NIKE's status as a dividend stock. Aneesha Sherman of Bernstein Research has a "Buy" rating on NIKE and highlights the company's strong dividend history and growth potential. JPMorgan analysts also have a "Neutral" rating on NIKE, citing the company's strong brand and dividend payouts. However, some analysts have expressed concerns about NIKE's recent stock price performance and the potential impact on the company's dividend payouts.

Conclusion

NIKE, Inc. (NKE) is a strong dividend stock with a history of consistent dividend payouts and growth. The company's dividend yield, payout ratio, earnings growth, and free cash flow growth are all positive indicators for dividend investors. Additionally, the majority of Wall Street analysts have a positive outlook on NIKE's stock, with an average rating of "Buy" and a 12-month price target of $91.3. While there are some concerns about NIKE's recent stock price performance, the company's strong fundamentals and dividend history make it an attractive choice for dividend investors.