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Nike: A Dividend Stock With Robust Growth

Mar. 04, 2021 9:35 AM ETNIKE, Inc. (NKE)30 Comments


  • Nike’s digital initiatives are driving revenue and lowering costs.
  • Greater China provides potential for long-term sales gains.
  • There is a great deal of evidence indicating NKE holds the position as the most popular apparel brand.

With iconic brands like Air Jordan and Air Max, Nike Inc. (NYSE:NKE) is the undisputed leader in footwear and sports apparel. The company’s $37 billion in FY 2020 sales attest to its dominance, but that number only hints at the true story.

The management team’s adept handling of coronavirus-related issues did more than minimize the damage: Nike turned the closures and restrictions to its advantage.

Over each of the last three quarters, the firm recorded roughly 80% year-over-year digital growth. Nike’s North American segment experienced 100% digital growth, with digital now representing 25% of the business in that region.

Increased sales are not new for Nike. In 2011, the company held 16.8% of the global market in footwear. By 2019, the company’s share had grown to roughly 27%.

The key to the firm’s growth lies in a visionary approach to consumers’ digital experience. This is exemplified by Nike’s membership programs, and other initiatives.

Nike's Digital Initiatives Should Drive Future Growth

Nike’s Q2 2021 sales were nearly 9% (roughly $1 billion) higher than the comparable quarter in 2020. It is easy to understand the growth e-commerce sales during a period marked by store closures and other restrictions. However, how does one explain the continued increase in digital sales after 90% of Nike’s stores were reopened?

How did the company weather the storm that toppled many other apparel companies? The answer is in Nike’s third party e-commerce efforts.

In 2017, the company launched the Consumer Direct initiative. The goal was to “drive growth by deeply serving customers” in 12 key major metropolitan areas around the globe. Management expected the strategy to drive 80% of the firm’s projected growth through 2020.

Other objectives were to cut production times in half, reduce the number of styles offered while increasing production of products in high demand, cut

This article was written by

Chuck Walston profile picture

As of 08/1023 I am rated among the top 3.4% of authors in terms of overall results. This is according to TipRanks, which provides a 64% success rate and an average 16.5% annual return for my articles. (I update this score on at least a quarterly basis for readers.)

I could be characterized as a safety first investor.  My primary focus is on dividend bearing stocks.  I seek a degree of safety in my investments by concentrating on companies with competitive advantages and strong balance sheets. 

I am a also value / buy and hold investor.   Since I require a discount in the share valuations of my investments, my  ratings are generally very conservative.  My valuation requirements, combined with the high quality companies that I often highlight mean many stocks I rate as a hold  perform well over the long term.   Readers should consider this when weighing my buy/hold/sell recommendations.  

I am a retail investor, with no formal training in investing.  

I am a graduate of the U.S Army Ranger school and a former member of the 1st Ranger Battalion and The Old Guard (U.S Army Honor Guard.) I am a retired law enforcement officer. I have approximately 20 years experience as a retail investor. 

Best of luck in your investments, Chuck

Analyst’s Disclosure: I am/we are long NKE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (30)

what you forgot to mention is EPS growth is stagnant and management is buying back share to keep up EPS figure and dividend. NKE price is inflated quitebit. I would not invest into stock treading with PE of 60 .when %PTP is decreasing, ROE is low and debt has increased drastically. With that in mind, NKE should come down in price where it can provide at least 1.8% to 2% dividend yield, that means <$75 price range.
steve7074 profile picture
@dalal555 There’s always one in every crowd.
Nike Rev should grow 12-15%
Earnings expected to grow at least 30% per year, many have the rate closer to 40.
PEG 1 - 1.5

Look forward, not backwards.

Run ! Do not Walk & Buy ! It’s a no brainer.

There was an analyst at ML who thought like you 2 years ago about Nike. He doesn’t any more.

Other than the Pandemic, when was the last time, Nike fell 50 %, in the 87 Crash ?
Greater China growth prospects. Aha lol. That went quick. You should not have mentioned it! 😂 It was Bad charma
Buy and hold at any price no matter what greatest company on the planet period
ArleneMarie profile picture
Chuck, Thank you for your article. It was helpful.
wonder if kids in usa who favor nike would still favor nike if they toured & worked along side their peer group in those overseas factories ?
@Carl 123 I Think they were the #1 pick for the people burning down cities and stealing shoes
doobiedoo profile picture
I can't get excited about Nike. I don't think it has a moat.

Yes, I know there is a lot of technology and design that goes into athletic gear and clothes, especially shoes. So I won't buy shoes from CheapNoNameCompanyB. But I have bought shoes from Saucony, New Balance, Nike, Addidas, and Brooks in recent years depending on the feel, the fit and the in-store recommendation. I have no loyalty to Nike or to any other shoe company. I would think most runners feel the same.

Yes, maybe some kids are influenced enough by peer pressure to buy a shoe brand. But that's not enough to make me buy the stock.
Chuck Walston profile picture

I would add that 30% of the company's revenue comes from apparel. Apparel preferences are nothin more than fashion trends, from my perspective. I would give the company a narrow moat, although I generally agree with your assessment.

I think I bought in 2006 and I believe the dividend now covers my initial cost every year. I don’t think it paid a dividend at that time.
craftbrewinfo profile picture
Hello @Chuck Walston ! Another thought provoking piece. I used to pass over stocks like Nike because of the yield. I have mixed things up a bit in 2021. With about a 10 year horizon until the Big R, I am looking closer at big compounders with not necessarily the highest yield, but with the highest DGR rates. I've added a few I would not normally have thought about such as V, HD and last month SHW ( humongous compounder). I really like the way my portfolio is shaping up with a mix of high yielders, low yielders, and sprinking a few of the aforementioned ones, which brings us here to NKE. Superb business. Reminds me of AAPL with the ecosystem of buyers who know and love the iconic brands. Looks like you have NKE as a hold, but I will add this to my watch list and look for a good entry point. Excellent food for thought here today. Thank you as always!
Chuck Walston profile picture
@craftbrewinfo ,

Thanks. Sometimes I wonder if I'm losing my edge. Too much writing boggles the mind.

You and I are both transitioning to stocks that have better growth prospects. Like you, I sprinkle a few fast growers with low yields in with a handful of slow growers with with big, safe yields. Of course, the bulk of my portfolio consists of the "standard" DGI stocks.

Take care,

steve7074 profile picture
@Chuck Walston yes, there are growth stocks with fast growing dividends, similar to VIG,
There are also slower or no growers in some cases with high dividends like VYM. Yes, I own T & VZ, ugh ! It’s good to own both types.
smurf profile picture
Wow! .80% dividend? C'mon fellow DGIers, let's load up.!
Nike makes junky sneakers, anyway. Flimsy and narrow.
Chuck Walston profile picture
@smurf ,

Long time, no see. I'm endeavoring to serve the whole DGI community. There are those that want a few growth stocks mixed in with the typical divvy stocks.

steve7074 profile picture
Just bought some NKE, such a great trading stock, has its good & not so good times. Sports like World Cup & Olympics should help.
Buyandhold 2012 profile picture
A $10,000 investment in Nike in April of 1985 with dividend reinvestment is now worth $13,374,720. CAGR 22.19%

And with a 5 year expected PEG ratio of only 1.30, Nike is a BUY.

There is gold in them thar running shoes.

I should know.

I recently bought a pair of New Balance running shoes with arch supports.


I told the salesman that they had better last me the rest of my life at that price.

I remember when you could buy a good pair of sneakers for $9.99.

Of course, gasoline was 25 cents a gallon in those days.
Chuck Walston profile picture
@Buyandhold 2012 ,

The very first pair of shoes my folks bought me for my basketball team were so poor (as were my parents) that I slid across the court like an ice skater. Since they saw some promise in by basketball skills, they broke down and bought me a pair of Converse All Stars, a coveted brand in my day,

You got a pair of cheapies. During my research, I discovered some Nike's sell for over $1000 !!!

Let me see. A pair of thousand dollar Nikes, or 7 shares of Nike stock and a pair of run-of-the-mill shoes for 70 dollars.

Which is the best deal?

@Buyandhold 2012 I just looked up AMZN at dividendchannel.com.

$10,000 invested in 1997 became $17,376,298! That's a 36.7% return annually.

But how many people had the fortitude to hold through all the corrections?
Buyandhold 2012 profile picture


I never sell no matter what.

The only shares of stock that I have ever sold are shares that I was forced to sell by a cash buyout.

For example, my shares of Hospira were bought by Pfizer for $90 a share.

That's why they call me Buy and Hold.

I buy and hold.
Excellent biz. Incredible valuation.
GDPPP profile picture
@Adrian2015 That's almost always the case. Investors need to pay for quality as quality comes at a price.
Best of breed NKE, down 5%, YTD. With life getting back to normal NKE, should have a solid 2021.
Art Eichler profile picture
How much does NIKE benefit from the Uighur slave labor ?
steve7074 profile picture
If NKE is a hold, when does it become a buy & let’s have a reasonable price. Nike will always be a grower.
I recall when M Lynch’s price was 20% below its price.
steve7074 profile picture
@steve7074 Just reviewed its 6 month chart, buy at 130 if it gets there with target in the 160’s.
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