1 Magnificent S&P 500 Dividend Stock Down 67% to Buy and Hold Forever

Nike (NYSE: NKE) has lost its way with investors. The iconic sneaker and athletic apparel giant has lost roughly two-thirds of its market value since the stock peaked nearly five years ago.

The company has struggled since the pandemic, haunted by mismanagement and a full-court press from competitors that resonated with consumers. Despite its woes, Nike stock is difficult to pass up as a buy-and-hold-forever dividend stock.

Image source: Nike.

The business still has good bones

Just because other brands have found success doesn't mean that they've displaced the Swoosh as the top dog in the sporting world. Nike is still far larger than any of its competitors, with more than $46 billion in annual sales. The company reaches global audiences through licensing rights across various professional sports and has endorsement deals with a laundry list of iconic athletes.

Nike's profit margins have declined significantly as it's discounted old merchandise to clear it out amid its turnaround efforts. However, Nike is on very solid financial ground. The company still has nearly $2.5 billion in free cash flow over the past year, and about $2.4 billion in net debt on its balance sheet.

It's fair to say Nike has stumbled, and it's certainly lost its growth-stock label. That said, Nike is far from a business circling the drain.

Positioning for the turnaround

Arguably, Nike's biggest misstep over these past five years was a decision to pull away from its entrenched relationships with wholesalers in favor of selling directly to consumers. This strategy ultimately backfired, and Nike inserted Elliott Hill as CEO in late 2024, a former Nike executive who returned from retirement.

Thus far, Nike has returned to selling on Amazon after a years-long absence and has focused on rebuilding relationships with traditional wholesalers such as Foot Locker. Nike's wholesale sales grew by 8% in the second quarter of its fiscal year 2026. It's not all perfect; for instance, tariffs have weighed on profit margins, and Nike is struggling in China right now.

But on a positive note, the signs are there that Nike's pivot back to its classic success formula of wholesale-driven sales is beginning to work again. Things should begin to look up if that momentum continues to build over future quarters.

A compelling valuation

Nike's stock doesn't look cheap at first glance. The business is changing, and earnings have dropped, offsetting the share-price declines. But from a revenue standpoint, Nike is sitting at a compelling valuation. In fact, the stock's price-to-sales ratio hasn't been this low in a very long time.

NKE P/S Ratio data by YCharts

The key is for earnings to rebound as the business regains traction. The turnaround story isn't complete yet by any stretch. But if the company continues to demonstrate that it can reclaim wholesaler shelf space and tighten up its struggles in China, Nike could thrive again.

It looks like the worst may be over, which makes now arguably the perfect time to consider buying and holding this longtime wealth builder.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nike. The Motley Fool has a disclosure policy.