NIKE (NKE) increases its dividend and increases the wealth of its shareholders


Well-known footwear and clothing company, NIKE, Inc. NKE, announced an increase of 11% in quarter dividend rate for outstanding Class A and Class B common shares. Effective growth strategies and strong cash flow have strengthened the company’s financial base, which helps it increase shareholder wealth.

The latest increase brings the quarterly dividend to 30.5 cents per share, from 27.5 cents previously. This is the 20th consecutive year of a dividend increase for the company. The revised dividend is payable on December 28, 2021 to shareholders of record at the close of business on December 6, 2021.

During the first quarter of fiscal 2022, the company paid dividends worth $435 million. Although the company has made quarterly dividend payouts, the recent rise prompts greater optimism. This move demonstrates the company’s commitment to delivering long-term shareholder value. It also reflects confidence in its financial position and ability to generate sufficient cash flow.

As part of the share buyback activities, NIKE repurchased shares worth $742 million during the first quarter. The company repurchased 4.8 million shares under its $15 million program approved in June 2018. As of August 31, it had repurchased 54.8 million shares for $5.4 billion. dollars under the aforementioned program.

Speaking of cash, NIKE ended the first quarter with strong liquidity, which included cash and short-term investments of $13,695 million. The figure was up $4.2 billion from last year’s levels. As of August 31, the company had no current portion of long-term debt. The latest dividend hike reflects the company’s dividend yield of about 0.7%, based on the stock’s closing price of $171.35 on Nov. 18. These aspects make the payment of the company’s dividend sustainable.

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Strategic growth efforts bode well

NIKE has made good progress with its Consumer Direct Acceleration strategy to fuel growth. The company benefits from an efficient digital ecosystem, which includes its online site as well as commercial and business applications. During the first quarter, NIKE-branded digital revenue grew 29% year-over-year on a reported basis. The company expects revenue in fiscal 2022 and beyond to benefit from robust growth in digital sales. The company is also benefiting from the relaunch of traffic conditions in stores, with leniency in pandemic-related restrictions. Efforts to boost assortments, including innovation, have paid off.

This Zacks No. 5 (Strong Sell) company has struggled with supply chain challenges and factory closures due to COVID-19, leading to product shortages and hampering product mobility . The company expects such delays in transit times to continue through fiscal 2022. Additionally, high freight and rising selling and administrative expenses have overshadowed the company’s margin growth.

We expect cautious growth efforts and favorable market conditions to continue to support the business and help weather the aforementioned headwinds. That said, the company’s shares are up 2.2% in the past three months compared to the industry2.3%.

Here are 3 key actions for you

We have highlighted three top-ranked stocks in the Consumer Discretionary sector, namely lululemon athletic inc. LULU, PVH Corp. HPV and Funko Inc. FNKO.

lululemon, a well-known sportswear company, has a Zacks rank of #2 (buy). The company has an earnings surprise for the last four quarters of 25.2% on average. Shares of the company are up 18.9% over the past three months. You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for lululemon’s sales and earnings per share (EPS) for the current fiscal year suggests growth of 42.2% and 59.8%, respectively, over Q3 figures. ‘last year. LULU has a long-term earnings growth rate of 20%.

PVH Corp, which specializes in the design and marketing of branded apparel and accessories, currently boasts a Zacks #1 ranking. The company has an earnings surprise for the last four quarters of 177.5% on average. Shares of the company are up 16% in the past three months.

Zacks’ consensus estimate for PVH Corp’s current-year sales and EPS suggests growth of 28% and 540%, respectively, over year-ago period levels. PVH has a long-term earnings growth rate of 59.1%.

Funko, engaged in manufacturing a wide range of consumer products, currently sports a Zacks #1 rank. The company has a four-quarter earnings surprise of 110.7% on average.

Zacks’ consensus estimate for Funko’s current fiscal year sales and EPS suggests an increase of 48.3% and 240.5%, respectively, over prior year numbers. FNKO has a long-term earnings growth rate of 40.4%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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