Is NIKE, Inc. (NKE) the Most Promising Dividend Stock According to Hedge Funds?
Saturday, Feb 1, 2025 2:37 pm ET
Nike, Inc. (NKE) has long been a favorite among investors, and its recent performance has caught the attention of hedge funds. With a market capitalization of over $165 billion, NKE is one of the world's largest companies in the textile-apparel, footwear, and accessories industry. As of Sep. 16, 2022, NKE had a market capitalization of $165.6 billion. But is NKE the most promising dividend stock according to hedge funds? Let's dive into the data to find out.

NKE's dividend history and growth
NKE has a strong track record of paying and increasing dividends. The company has paid quarterly cash dividends to its shareholders since 1985 and has increased its dividend for 15 consecutive years. In 1985, the year the company IPO'd, it paid a $0.05 quarterly dividend per share; the latest quarterly dividend was $0.88. Over the past three years, NKE's dividend has increased by an average of 15.8% per year.
NKE's earnings trends
NKE has consistently generated increasing revenues and earnings over the past 10 years. Based on trailing 10-year data, it has an average annual revenue growth rate of 9.9%, an average annual earnings before interest, taxes, depreciation, and amortization (EBITDA) growth rate of 10.1%, earnings per share (EPS) without nonrecurring items (NRI) growth rate of 11.5%, a free cash flow growth rate of 9.7%, and a book value growth rate of 10.2%.
NKE's dividend payout ratio and dividend coverage ratio
Over the past 10 years, NKE has not paid out more than half its earnings. Consequently, it maintained a high dividend coverage ratio, which indicates its dividend was sustainable over this period. The dividend payout ratio indicates the portion of EPS that is paid out to investors in the form of cash dividends. The dividend coverage ratio indicates the number of times a company can pay dividends to shareholders with its EPS.
NKE reported a full-year EPS of $3.46 for the 2018 fiscal year. Therefore, it had a dividend coverage ratio of 3.43 and a dividend payout ratio of 29.19%. It had a full-year EPS of $2.97, a dividend coverage ratio of 3.19, and a dividend payout ratio of 31.31% for the fiscal year ending on May 31, 2018. NKE reported a full-year EPS of $2.70 and paid out an annual dividend of 60 cents per share during the 2013 fiscal year. Consequently, it had a dividend coverage ratio of 4.5 and a dividend payout ratio of 22.22% for the end of this period. Since NKE maintains a high dividend coverage ratio and has not paid out more than it is earning, it is unlikely for it to ruin its track record and cut its dividend.
NKE's increasing positive free cash flow solidifies its future for dividend payments. Over the past five fiscal years, NKE has not paid out more than half of its free cash flow in dividends. NKE had a free cash flow of $3.72 billion for the fiscal year ending on May 31, 2015, which is an increase of 75.47% compared to the fiscal year ending in May 2014. As NKE generated increasing earnings and stable free cash flows between 2011 and 2015, it has consistently raised its dividends and maintained a dividend payout ratio of between 20 to 30%.
NKE's expected earnings, revenue, and dividend future
Based on 19 analyst estimates, NKE is expected to report a full-year EPS of $4.28 with the lowest and highest ranging between $4.15 and $4.42 for the fiscal year ending in May 2016. Based on 29 analyst estimates, it is expected to report full-year revenue of $32.76 billion. Additionally, it is expected to report full-year dividends of $1.60 per share.
NKE's dividend yield and comparison to industry peers
NKE's dividend yield is 2.04%, which means that for every $100 invested in the company's stock, investors would receive $2.04 in dividends per year. NKE's payout ratio is NaN%, which means that NaN% of the company's earnings are paid out as dividends. A low payout ratio may indicate that the company has a strong financial position and can invest in growth opportunities, while a high payout ratio may indicate that the company is returning most of its earnings to shareholders. NKE's annual dividend is $1.48 per share. This is the total amount of dividends paid out to shareholders in a year. NKE's ex-dividend date is June 3, 2024, which means that buyers purchasing shares on or after that date will not be eligible to receive the next dividend payment. NKE pays dividends on a quarterly basis. NKE has increased its dividends for 23 consecutive years. This is a positive sign of the company's financial stability and its ability to pay consistent dividends in the future. Dividend Yield 2.04% Annual Dividend $1.48 Ex Dividend Date Jun 03, 2024 Dividend Growth 9.43% Payout Ratio - Payout Period Quarterly Next Div Payment TBA Cons. Yrs Growth 23 Dividend History and Growth NKE's dividend payments per share are an average of 9.43% over the past 12 months, 10.66% over the past 36 months, 11.01% over the past 60 months, and 11.93% over the past 120 months. It is important to note that NKE's dividend history and growth can be affected by many factors, such as profitability, cash flow, and financial stability, as well as its growth prospects and dividend payout policies. Add NKE to your watchlist to be aware of any updates. Dividend Growth Table 1Y 3Y 5Y 10Y Annualized Growth % 9.43% 10.66% 11.01% 11.93% Dividend Growth Graph Open in Koyfin View Interactive Chart Dividend Yield NKE's dividend yield graph is a visual representation of NKE's dividend yield over the last 12 months. This is useful for investors to understand NKE's historical dividend yield and to identify any trends or patterns in the company's dividend payments over time. Dividend Yield Chart Open in Koyfin View Interactive Chart Shareholder Yield Shareholder yield is a metric that measures the total return to shareholders through dividends, buybacks, and debt paydown. It is a ratio that compares the cash returned to shareholders over a period of time to the market capitalization of the company. NKE's shareholder yield graph below includes indicators for dividends, buybacks, and debt paydown, which allows investors to see how each component contributes to the overall shareholder yield. It's important to note that shareholder yield is just one metric among many that investors may use to evaluate a company's financial health and its potential for future growth. It should be considered in conjunction with other financial metrics such as earnings, revenue, and debt levels to get a comprehensive understanding of a company's financial position. Shareholder Yield Chart Open in Koyfin View Interactive Chart Dividend Safety Dividend safety refers to the ability of a company to continue paying its dividends to shareholders without interruption or reduction. A company with a high level of dividend safety is generally considered to have a strong financial position, with a consistent history of paying dividends and a low risk of default. Some specific indicators often used to assess NKE's dividend safety include Dividend payment history: NKE has a long history of paying dividends and has consistently increased its dividend payout for 23 consecutive years. Dividend payout ratio: Not available It is worth noting that Dividend safety can change over time, and a company that was considered to have a high level of dividend safety in the past may no longer be considered safe today. Therefore, it is important to regularly monitor a company's financial performance and dividend payment history. Dividend Safety Graph Open in Koyfin View Interactive Chart Comparing NKE to Other Stocks The percentile ranks table is a way to compare NKE's dividend yield relative to its sector, country, and the world. Dividend yield: NKE's latest value of 2.04% is the percentage of the current stock price that is paid out as dividends to shareholders. The relative to the sector, country, and world values (0.5, 0.4, and 0.45 respectively) indicate NKE's dividend yield compared to others in its sector, country, and world.