Nike (NKE) now carries a forward 12-month dividend yield of 4 percent, exceeding Coca-Cola's (KO) 2.4 percent—a notable spread given Coca-Cola's status as a Dividend King with 50 consecutive years of dividend increases.
The yield disparity directly reflects a depressed share price. Investors have not yet fully priced in Nike's stabilization efforts and path to profitability recovery.
Nike declared a $0.41 quarterly dividend, payable Oct. 1 to shareholders of record Sept. 1, annualizing to $1.64 per share. While the payout ratio is elevated, the company generates sufficient free cash flow to cover dividend obligations. Analysts project free cash flow to rebound to $3 billion in fiscal 2027 from a trailing 12-month figure of $2.2 billion.
In the trailing 12 months, Nike distributed $2.4 billion in dividends against $2.2 billion in free cash flow. That gap should narrow as management executes its margin stabilization plan.
Full-year sales were flat at approximately $46 billion, down 2 percent on a currency-neutral basis. But underlying momentum is improving. Nike Running achieved five consecutive quarters of double-digit growth. Training and global football segments also showed strengthening retail trends.
Demand remains softest in lifestyle categories—sportswear and Jordan streetwear—which represent roughly half of total sales. Performance wear is more resilient, and this product mix shift favors margin expansion.
Valuation supports the bull case. Nike trades at 1.3 times sales, well below its historical range of 2.0 times or higher. If the company successfully reduces inventory, improves its product mix, and expands margins, re-rating to 1.6–1.8 times sales is reasonable. That would deliver both dividend income and capital appreciation—a rare combination for a mature Dividend King.
