Nike: World Class Brand, Amazon Deal Will Provide Compelling Growth For This Dividend Achiever

Nike (NKE) may not offer the most impressive dividend yield, but it more than makes up for it, with high dividend growth. Nike has a current dividend yield of 1.2%, but if investors are patient, they can earn a high dividend yield with time. That is because Nike has increased its dividend for 15 years in a row. It is a Dividend Achiever, a group of stocks with 10+ years of consecutive dividend growth. You can see the entire list of all 264 Dividend Achievers by clicking here. Over the past 10 years, Nike has increased its dividend by approximately 15% per year, on average. At this rate, Nike’s dividend would effectively double every five years.

Nike’s high dividend growth is due to its strong earnings growth. The result is Nike generates significant shareholder wealth with a rising share price, in addition to dividend growth. This article will review Nike’s recent quarterly earnings report, which sent the stock up 10%, and why it remains a highly attractive dividend growth stock.

Business Overview

Nike is a global footwear and athletic apparel giant. It operates two segments:

Footwear makes up approximately 64% of the company’s revenue, with the remainder comprised of apparel and equipment.

On June 29th, Nike released financial results for fourth quarter and fiscal 2017. The results were very strong, as Nike surpassed analyst expectations on both the top and bottom lines. Revenue for the fourth quarter came in at $8.68 billion, which was approximately $50 million above forecasts. Earnings-per-share for the quarter were $0.60, while analysts were expecting $0.50.

On a year-over-year basis, Nike grew revenue and earnings-per-share by 7% and 22%, respectively. Earnings growth benefited from higher sales, as well as cost cuts and share repurchases. For the full fiscal year, Nike grew revenue by 6%, and earnings-per-share by 16%.