Nike Is Down 78% From Its Peak. Here's How Much $10,000 Invested Pays in Dividends Now.
Key Points
A 24-year streak of dividend increases has made Nike's dividend more compelling.
Investors need to watch free cash flow and revenue trends.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
The last five years have been among the most difficult in the history of Nike (NYSE: NKE) stock. Over that time, the stock has steadily slid and recently was down 78% from its all-time high.
The silver lining in this scenario is that it raises the dividend yield considerably. Thus, investors might be surprised to learn how much a $10,000 investment in Nike now earns in dividends.
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Today, Nike pays its shareholders $1.64 per share annually, and it has a 24-year streak of payout hikes, a record that admittedly makes Nike stock hard to ignore. Amid the falling share price, the dividend yield is just under 4.3%.
As of the time of this writing, $10,005 buys 260 shares, meaning a shareholder buying today will earn just over $426 in annual dividend income.
Although that seems like a strong return, investors may have to worry about how Nike will pay for it. In fiscal 2026 (ended May 31), Nike's $2.2 billion in free cash was less than the $2.4 billion cost of the dividend over the same time frame. The situation worsened further in the first quarter of fiscal 2027 (ended Aug. 31), when free cash flow was negative.
Since Nike has $8.4 billion in liquidity, the dividend is probably not in immediate danger. Still, if Nike cannot increase its free cash flow, it could bode poorly for its payout.
Unfortunately, analysts forecast an 8% revenue decline in fiscal 2027, followed by a 1% increase the next year. Those forecasts strongly indicate that Nike's performance is not going to improve anytime soon.
Ultimately, income investors tend to be conservative, which will likely discourage taking a chance on a possible recovery. Unless Nike can rejuvenate its growth, this consumer discretionary stock may not be a great choice for a $10,000 dividend investment.
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Will Healy 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.
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