Updated 3/11/2025
Nike has been a powerhouse in the athletic apparel industry for decades. The brand is globally recognized, backed by strong marketing, and has a loyal customer base. But for investors focused on dividends, the real question is whether Nike is a strong long-term choice for income generation.
At a current price of around $74.17, the stock has seen a significant decline from its highs over the past year. While some investors see this as an opportunity, others are questioning whether Nike’s slowing growth makes it a less attractive dividend stock. Let’s take a deeper look at its dividend metrics, financial health, and what the future may hold for income-focused investors.
Key Dividend Metrics
📌 Dividend Yield: 2.16% (higher than its historical average)
📌 Annual Dividend: $1.60 per share (forward estimate)
📌 Payout Ratio: 46.6% (reasonable and sustainable)
📌 5-Year Dividend Growth Rate: 11.8% (solid, but slowing)
📌 Consecutive Years of Dividend Growth: 22 years (consistent track record)
📌 Ex-Dividend Date: March 3, 2025 (important for investors who want the next payout)
📌 Next Dividend Payment: April 1, 2025
Nike isn’t a high-yield stock, but it has been a steady dividend grower for over two decades.
Dividend Overview
At a 2.16% yield, Nike’s dividend is more attractive than in past years, largely because the stock price has come down. Over the past five years, the average yield has been closer to 1.15%, making this a relatively rare opportunity for investors looking for dividend income.
The company pays out $0.40 per share quarterly, which translates to an annual dividend of $1.60 per share. While this isn’t the kind of yield that retirees might rely on for income, it’s more about long-term dividend growth rather than high immediate income.
With a payout ratio of 46.6%, Nike is in a comfortable position where it’s returning a fair portion of earnings to shareholders while still having room for reinvestment in the business.
Dividend Growth and Safety
Nike has been raising its dividend for 22 consecutive years, proving its commitment to shareholders even in challenging economic conditions. The five-year dividend growth rate of 11.8% is impressive, though recent years have seen a slowdown.
One of the key factors behind Nike’s ability to sustain its dividend is its strong free cash flow, which sits at $5.2 billion. As long as cash flow remains strong, the dividend should be safe.
That being said, Nike is facing declining earnings, with quarterly earnings down 26.3% year-over-year. If this trend continues, future dividend increases may not be as aggressive as they have been in the past. The dividend is not at risk of being cut anytime soon, but investors should expect smaller hikes moving forward.
Chart Analysis
The Nike (NKE) stock chart tells a story of persistent weakness over the past year, with occasional rebounds that haven’t been able to break the larger downtrend. Investors looking for a turnaround need to weigh whether the stock is stabilizing or if further downside is likely. Several technical indicators provide insights into where things stand.
Long-Term Downtrend Remains Intact
The most glaring feature of this chart is the consistent downward trajectory that Nike has been in for nearly a year. The 200-day moving average (purple line) has been sloping downward the entire time, showing that the long-term trend remains bearish. While there have been attempts to rally, each time the stock has struggled to sustain upward momentum.
More recently, the 50-day moving average (light blue line) has been acting as both resistance and support at various points, with the latest price action showing a rejection after briefly crossing above it. That suggests that short-term traders are keeping a close eye on this level.
Recent Price Action and Key Levels
Nike closed at 74.17 after trading as high as 76.08 and as low as 73.62 on the day. The stock has bounced off its recent lows around 68, but the latest pullback suggests that resistance in the 78-80 range remains strong.
If the stock continues to struggle around these levels, the next key support area would be near 70, a level that has held multiple times. A break below that could bring a retest of recent lows, while any move above 80 would indicate a shift in sentiment.
Volume and Market Participation
Trading volume came in at 12.77 million, which is within the stock’s normal range. However, what’s notable is that the volume spikes in the past have generally aligned with sharp downward moves rather than strong buying pressure. That suggests that there’s more urgency when investors are selling than when they are buying, which isn’t a great sign for a sustainable rally.
Relative Strength Index (RSI) and Momentum
Looking at the RSI, the stock has been hovering in the lower part of its range, showing that momentum has been weak for quite some time. While there was a recovery from oversold conditions back in July and again in October, those rebounds were short-lived. The RSI has recently turned lower again, indicating that Nike may not have the strength to push higher without a significant shift in sentiment.
Moving Averages and Trend Confirmation
The gap between the 50-day and 200-day moving averages remains wide, reinforcing that the longer-term trend is still bearish. A true reversal would require the 50-day moving average to cross back above the 200-day, but at this point, that doesn’t appear to be on the horizon.
Instead, each rally has been met with resistance near the 50-day or just below the 200-day, keeping the stock stuck in a downward-sloping channel. For investors looking for signs of a trend shift, they would want to see higher highs and higher lows, something that has been missing from this stock for quite some time.
Analyst Ratings
Nike’s stock has recently been the subject of both upgrades and downgrades, reflecting a diverse range of analyst opinions. The consensus 12-month price target among analysts is approximately $88.12, suggesting a potential upside from its current trading levels.
🔼 Upgrades
📈 Jefferies Financial Group recently upgraded Nike from a hold to a buy rating, raising the price target from $75 to $115. This upgrade is based on expectations of a significant recovery in margins and earnings per share, driven by improved inventory management and product innovation. Analysts anticipate that by fiscal year 2027, Nike’s earnings could reach $3.50 per share, surpassing Wall Street’s consensus of $2.95. The company’s efforts to clear excess inventory from older product lines are expected to pave the way for new product launches and a restocking cycle starting in the fall. These initiatives are projected to help gross margins approach their 10-year average of 45%.
📊 Bernstein also reaffirmed its buy rating on Nike, setting a price target of $102. The analyst highlighted the company’s strategic innovation and strong consumer loyalty as key factors supporting this positive outlook.
🔻 Downgrades
📉 Citigroup recently downgraded Nike from a buy to a neutral rating, lowering the price target from $102 to $72. This decision stems from concerns about challenges in the company’s turnaround efforts, particularly in the running segment, which may delay the anticipated recovery until fiscal year 2026. Analysts expressed skepticism regarding Nike’s ability to overcome competitive threats and achieve the expected improvements in revenue and earnings within the projected timeframe.
⚖️ Barclays maintained its hold rating on Nike, with a price target of $70. The analyst acknowledged Nike’s strong brand and market position but cited uncertainties related to global growth trends and potential headwinds in key markets as reasons for a more cautious stance.
These mixed analyst perspectives highlight the complexity of Nike’s current market position, with some seeing long-term recovery potential and others concerned about short-term execution risks.
Earnings Report Summary
Nike’s latest earnings report was a mixed bag, showing both challenges and signs of strategic adjustments. The company is clearly navigating a tough retail environment, and while there were some bright spots, the numbers suggest it’s still facing headwinds.
Revenue and Profitability
Nike pulled in $12.35 billion in revenue this past quarter, but that was down 7.7% compared to last year. The dip came as consumer spending slowed and competition in key markets ramped up. Despite lower sales, the company managed to keep its gross margin at 43.6%, thanks to better pricing strategies and cost-cutting efforts.
On the bottom line, net income dropped by 26% to $1.2 billion, and earnings per share came in at $0.78, reflecting a 24% decline. While those numbers aren’t ideal, Nike’s tax rate stayed at 17.9%, the same as last year, helping keep some stability in the financials.
Operating Expenses and Cost Control
Nike has been working to manage costs, and it showed in the numbers. Selling and administrative expenses fell by 2%, landing at $4 billion. Interestingly, marketing and brand investments jumped 15% to $1.2 billion, likely tied to major sporting events and promotional efforts. Meanwhile, operating overhead costs were trimmed by 7% to $2.8 billion, mostly from reduced wage-related expenses.
Balance Sheet Strength
Inventory levels remained steady at $8 billion, which is a positive sign that Nike has been handling its supply chain well, even in a slower sales environment. The company still has a strong cash position, with $9.8 billion in cash and short-term investments, though that’s $200 million less than last year. The dip was mainly due to spending on dividends, stock buybacks, and capital investments.
Shareholder Returns
Nike didn’t hold back on rewarding investors. The company returned $1.6 billion to shareholders last quarter, with $557 million going to dividends, marking a 7% increase from the previous year. On top of that, $1.1 billion was spent on share repurchases, part of its ongoing stock buyback program, which has now totaled $11.3 billion since 2022.
Where Nike Goes From Here
Nike’s new CEO, Elliott Hill, has been shifting the company’s focus back to its core sports categories—think running, basketball, and training. The idea is to get back to what made Nike an industry leader while sharpening its brand positioning. That said, these adjustments may take some time to show up in the financials, and there could be a few more bumps in the road before real growth returns.
The latest earnings report shows a company in transition. Sales are down, profits are under pressure, but Nike is making moves to refocus and position itself for the future. Investors will be watching closely to see if these efforts pay off in the coming quarters.
Financial Health and Stability
Nike has a strong balance sheet overall, but there are a few things worth noting:
- Cash reserves are at $9.76 billion, giving it a financial cushion.
- Total debt stands at $12.07 billion, which is manageable but higher than some investors may prefer.
- The debt-to-equity ratio is 85.95%, which is on the higher side for a company like Nike.
Nike’s current ratio of 2.22 suggests it has plenty of liquidity to cover its short-term obligations. While the company does have debt, it’s not in a dangerous position.
One of the strongest indicators of Nike’s financial health is its return on equity (ROE) of 34.67%, which suggests the company is highly efficient at generating profits from its capital. However, the return on assets (ROA) of 9.84% is lower, indicating that profitability could be improved.
The company generates $6.12 billion in operating cash flow, which supports both business operations and dividend payments. The main concern is that revenue growth has turned negative at -7.7% year-over-year. If Nike doesn’t reverse this trend, long-term profitability could take a hit.
Valuation and Stock Performance
Nike’s stock has dropped significantly, now trading 26.83% below its 52-week high of $102.49. While some investors see this as a chance to buy at a lower valuation, the numbers suggest the stock isn’t necessarily cheap.
- The trailing price-to-earnings (P/E) ratio of 22.89 is reasonable but not a bargain.
- The forward P/E ratio of 30.30 suggests expectations for earnings growth remain high.
- The price-to-book ratio of 7.82 is elevated, meaning Nike still trades at a premium relative to its book value.
Nike’s PEG ratio of 6.05 is a potential warning sign—it suggests the stock may be overvalued based on its expected earnings growth. Historically, Nike has commanded a premium valuation, but with revenue growth slowing, some investors may question whether it deserves to trade at these levels.
From a technical perspective, the 50-day moving average is $75.01, and the 200-day moving average is $79.64, meaning the stock is in a clear downtrend. Until the price stabilizes or trends upward, there may be continued weakness.
Risks and Considerations
While Nike remains a strong brand, there are a few risks that dividend investors should keep in mind:
- Declining Revenue – The -7.7% revenue drop is a concern. If this continues, earnings could remain under pressure.
- Margin Pressures – Operating margins are at 11.2%, which is solid but lower than historical levels. If costs rise further, profitability could decline.
- Competitive Landscape – Nike faces fierce competition from Adidas, Under Armour, and other emerging brands, especially in China and other key markets.
- Consumer Spending Trends – With economic uncertainty, discretionary spending on apparel and footwear may remain weak.
- Stock Volatility – With a beta of 1.02, Nike moves roughly in line with the overall market. Given its recent underperformance, further volatility is possible.
Final Thoughts
For dividend investors, Nike is a high-quality, long-term dividend growth stock with a strong history of increasing payouts. However, the combination of slowing revenue growth, declining margins, and a relatively high valuation makes it a less obvious choice in the current market environment.
Nike works best for investors who prioritize dividend growth over yield. If you believe the company can turn around its revenue decline and maintain profitability, this could be an attractive time to buy. However, if you’re looking for higher immediate income, there are other stocks that may be better suited to meet that need.
Nike’s brand strength remains its biggest asset, and if earnings stabilize, the dividend should continue growing. For now, investors should watch for signs of revenue and margin recovery before expecting a return to stronger dividend growth rates.
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