Verizon Has a Dividend Yield Of 5.9% and Nike's Is 3.7%. But Which High-Yielding Dividend Stock Is a Better Buy?

Income investors hunting for above-average yield often gravitate toward consumer brands and telecom stocks, and Verizon Communications (NYSE: VZ) and Nike (NYSE: NKE) fit the bill -- especially since both have raised their dividends every year for around two decades (19 years for Verizon and 24 for Nike). And both yields are well above the broader market.

But yield alone doesn't decide which is the better buy. The real question is which payout looks more durable -- and which underlying business is moving in the right direction. So which stock comes out on top?

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Nike: a high yield, but for the wrong reasons

The sneaker giant's dividend yield of about 3.7% is unusually high by its own historical standards, but that says more about the stock than the dividend. Shares are hovering near a 10-year low.

In November, Nike raised its quarterly dividend by 3% to $0.41, marking the company's 24th consecutive annual increase. But the underlying business backing this dividend growth is disappointing -- and it helps explain why the stock isn't faring well.

Nike's most recent results -- its fiscal third quarter of 2026 (the period ended Feb. 28, 2026) -- showed revenue of $11.3 billion, flat year over year on a reported basis and down 3% on a currency-neutral basis. Wholesale revenue rose 5%, but Nike Direct revenue fell 4%, and digital sales slid 9%. Further, Greater China declines continued, and the Converse business saw a 35% drop.

The bigger issue, though, is profitability. Earnings per share sank 35% year over year to $0.35, with gross margin contracting 130 basis points to 40.2% as higher tariffs in North America weighed on results. CEO Elliott Hill framed the work ahead as part of a longer comeback during the company's fiscal third-quarter earnings call.

"We have approached this comeback deliberately across brands, sports, geographies, and channels, with some parts of the portfolio moving faster than others," Hill said.

A meaningful chunk of fiscal Q3's revenue softness came from removing what management called "unhealthy inventory" of its classic footwear franchises -- a move that created a five-point headwind to reported results. And looking ahead, management's outlook for fiscal Q4 calls for revenue to fall 2% to 4% year over year, with Greater China expected to drop about 20%.

All of this leaves the dividend with depressed support. Over the next 12 months, Nike could pay out roughly $2.4 billion in dividends -- but its free cash flow for fiscal 2026 is tracking below this level.

Verizon: a dividend with momentum behind it

Now consider the alternative. Telecom giant Verizon's dividend yield sits near 5.9%. But the story behind that yield is improving rapidly.

In late April, Verizon reported first-quarter 2026 revenue of $34.4 billion, up 2.9% year over year. Non-GAAP (adjusted) earnings per share rose 7.6% to $1.28. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at a record $13.4 billion, up 6.7%. And free cash flow climbed 4% to $3.8 billion.

Just as encouraging, Verizon delivered its first positive first-quarter postpaid phone net additions since 2013 -- a clear signal that subscriber momentum is finally turning. CEO Dan Schulman summed up the message in the company's first-quarter earnings release.

"Our first-quarter 2026 results show that our turnaround is not only progressing, it is gaining momentum," said Verizon CEO Dan Schulman in the company's first-quarter earnings release.

Management responded by raising its full-year adjusted earnings-per-share growth guidance from 4% to 5% to 5% to 6%. The company also reaffirmed its 2026 free cash flow outlook of $21.5 billion or more, representing growth of at least 7%.

That last figure -- strong free cash flow momentum -- is what makes Verizon's yield so different from Nike's. Verizon's annual dividend of $2.83 per share works out to roughly $11.8 billion in payouts -- about half of expected free cash flow. That's a comfortable cushion, leaving room to pay down debt from the recent Frontier acquisition, fund more share repurchases, and continue raising the dividend, which the company has done for 19 consecutive years.

Overall, Verizon looks like the clear winner in this comparison of the two dividend stocks.

Not only does the telecom giant offer investors a higher dividend yield, but its dividend looks more durable. While neither stock is without risk, the odds seem higher that Verizon will be a better long-term investment from here. Sure, Nike's payout could become more attractive once its turnaround takes hold, but the dividend looks less attractive and potentially more at risk of being cut or growing more slowly over time.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.