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Nike Stock to Pay Larger Dividends

By Joe Tenebruso - Nov 16, 2019 at 7:21AM

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The sports apparel titan is boosting its cash payout to investors.

If you're a Nike ( NKE -0.63% ) shareholder, you're about to get a raise.

The athletic footwear, apparel, and equipment maker announced on Thursday that its board of directors authorized an 11% increase in its dividend. The move will bring Nike's quarterly cash payout to $0.245 per share, up from $0.22. 

The dividend will be paid on Jan. 2, 2020 to shareholders of record at the close of business on Dec. 2, 2019.

A person in a business suit handing out $100 bills

Nike is paying out more cash to its investors. Image source: Getty Images.


Nike is coming off a strong fiscal first quarter that saw revenue rise 10% year over to $10.7 billion on a currency-neutral basis, fueled by robust growth in its e-commerce business. "Our targeted strategic investments are accelerating Nike's digital transformation and extending our competitive advantage," CFO Andy Campion said at the time. 

Nike's profit growth was even more impressive. The company's earnings per share surged 28%, to $0.86, fueled by the aforementioned sales growth and higher gross margins. 

Nike is committed to passing a significant portion of these profits on to investors via share repurchases and a rising dividend income stream. The company bought back 11.9 million shares of its stock for approximately $995 million in the first quarter alone, and a total of 23.5 million shares -- for approximately $2 billion -- since June 2018. 

"Nike has consistently delivered strong cash flow and returns for shareholders and today's announcement marks Nike's 18th consecutive year of increasing dividend payouts," Chairman and CEO Mark Parker said in a press release. "This dividend increase, combined with the four-year $15 billion share repurchase program announced in 2018, reflects continued confidence in our strategies to generate long-term, profitable growth." 

To Parker's point, Nike excels at turning its sneakers and apparel into cash for investors. The sportswear giant generated $5.9 billion in operating cash flow in fiscal 2019 and nearly $4.8 billion in free cash flow. Nike's outstanding cash flow production has also helped it amass more than $3.6 billion in cash reserves and investments, though it does have $3.7 billion in debt. 

Looking ahead

Importantly, Nike's dividend payments, while sizable at $1.3 billion in fiscal 2019, accounted for less than 30% of its free cash flow in its last fiscal year. The company can easily afford this latest dividend increase, as well as many more in the future, particularly since management expects its revenue, earnings, and cash flow to all head higher in the years ahead. 

"Even amid the increasingly volatile macroeconomic and geopolitical environment, we expect our unrelenting focus on better serving the consumer to continue fueling strong, broad-based growth across our global portfolio," Campion said in Nike's first-quarter earnings release. 

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