You Can Do Better Than Nike. Buy This High-Yield Dividend Stock Instead.

Sometimes, it's best to avoid a stock getting a lot of press coverage and instead concentrate on a solid, dividend-paying stock. For instance, Nike (NYSE: NKE) has been trying to turn around its operations, but its sales have lagged.

The company's fiscal first-quarter revenue (ended Aug. 31) dropped 5% after adjusting for foreign-currency translations. Investors haven't been impressed, sending the share price down nearly 40% through Oct. 22 this year. During this time, the S&P 500 index gained 12%.

Image source: Getty Images.

Meanwhile, Procter & Gamble (NYSE: PG) continues to execute, rewarding investors with growing dividends and a higher share price (up 15.6% this year).

Products have high market shares

You've almost certainly heard about Procter & Gamble's products, and you likely have some of them in your home. That's because it sells items like shampoo, razor blades, toothpaste, detergent, and diapers.

While these sound mundane, Procter & Gamble's products command high market shares. For instance, Head & Shoulders, Tide, Gillette, and Pampers have a well-recognized presence in the marketplace. Clearly, the company keeps doing something right to continue drawing customers.

As you'd imagine, demand for these products doesn't dip much, if at all, during economic downturns. After all, you need these items as part of your day-to-day life.

You can see this in recent results, with the pace picking up lately. During the first fiscal quarter (ended Sept. 30), sales (adjusted to remove foreign-currency translations and the effects of acquisitions and divestitures) grew 4% year over year. Notably, higher volume contributed 2.4 percentage points.

Cash flow machine

Not only are its products noncyclical, but they also generate substantial cash flow for the company. Procter & Gamble uses part of this free cash flow, or operating cash flow minus capital expenditures, to pay dividends.

Its fiscal 2026 free cash flow totaled $15.1 billion. That easily covered the company's $10.2 billion in dividends. That period ended on June 30.

Having products with stable demand, high market shares, and prodigious cash flow means Procter & Gamble has built one of the most impressive dividend histories. That includes paying a dividend for 136 years. Better still, the company has raised dividends annually for a remarkable 70 straight years. That makes Procter & Gamble a Dividend King, a group of companies that have raised dividends for at least 50 consecutive years.

Shareholders can feel secure about Procter & Gamble's dividends and confident about annual increases. They can also enjoy a 2.6% dividend yield, higher than the S&P 500's 1.1% yield.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.