NIKE (NKE) Hikes Dividend, Focuses on Growth Initiatives

NIKE, Inc. NKE is focused on boosting investors’ optimism through several growth initiatives and shareholder-friendly moves. To boost shareholders’ value, the company recently announced 11% hike in its quarterly dividend, taking it from 22 cents a share to 24.5 cents for outstanding Class A and Class B Common Stock. The new dividend is payable on Jan 2, 2020 to shareholders of record as of Dec 2, 2019.

Incidentally, this marks the 18th straight year of dividend hike by the company. Markedly, dividend hikes enhance shareholders’ returns and also raise the market value of the stock. Through this strategy, companies try to attract investors and persuade them to either buy or hold the stock.

Apart from making regular dividend payments, NIKE is actively managing its capital and returning much of its free cash to shareholders via buybacks. In the last reported quarter, NIKE bought back 11.9 million shares for $995 million under its four-year $15-billion share repurchase program that was approved in June 2018.

Wrapping Up

This Zacks Rank #2 (Buy) stock has increased 22.1% in the past year compared with the industry’s growth of 21.5%

NIKE displayed a strong start to fiscal 2020, posting 7% year-over-year increase in revenues to $10,660 million. The upside was primarily driven by smooth progress in its Consumer Direct Offense strategy, backed by product innovation and unmatched digital experiences. Despite tariff-related concerns, NIKE continues to deliver strong results in Greater China, one of its key markets, with consistent strength in the digital business. The company delivered its 21st straight quarter of double-digit growth in Greater China in the fiscal first quarter.  

Going forward, the company is expected to continue making investments in key platforms like React and Air sportswear categories. It expects results for fiscal 2020 to be driven by brand recognition, robust innovation pipeline and positive response from Nike Direct as well as wholesale partners. Management expects high-single-digit revenue growth on a reported basis for fiscal 2020.

Other Key Picks

Deckers Outdoor Corporation DECK has a long-term earnings growth rate of 12.1% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Steven Madden SHOO has a long-term earnings growth rate of 6% and a Zacks Rank #2.

Callaway Golf Company ELY has a long-term earnings growth rate of 25% and a Zacks Rank #2.

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