Nike shares gain as company boosts dividend

Shares are trading higher after the company unveiled a new $6.50-per-share quarterly dividend and increased its share buyback program

Nike’s new boost to its already lucrative dividend has sent its stock surging, as analysts say the company is making the right investments to keep its lead in the global sports apparel market.

The company announced it would be raising its dividend by 21% to $0.46, or $1.84 a year, from $0.41 a share.

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S&P Dow Jones Indices, which owns an index of S&P 500 stocks, recently named Nike the world’s most valuable company – but the athletic shoe and clothing maker does not count the rise in its share price among its revenue. The stock price, however, is up 2.2% to $53.21 on Friday.

Since 2002, Nike has delivered 24 consecutive annual dividend increases. It raised its payout by 5 cents in 2010, when it was $0.33 a share. In 2012, it changed its dividend from quarterly to yearly payments.

As Forbes noted, the announcement of the pay raise comes as Nike’s shares trade near all-time highs, and the company is predicted to outpace its competitors for a 12th consecutive year. On Wednesday, it beat the markets’ expectations by reporting a 21% rise in revenue.

The higher dividend will amount to around 5% of the company’s annual revenue.

Nike told CNBC on Friday it’s “not so much about size, but the stability of the dividend, which increases [the company’s] ability to reward shareholders”.

Morningstar, a fund research firm, echoed that sentiment: “Our long-term outlook for the company looks good, particularly with the dividend increase,” a spokesman told the financial news agency.

The company has developed new products that have done especially well overseas, like the Air Max 97 sneaker.

Nike has been facing stiff competition from Adidas, including for product, design and services. Last week, Adidas announced it would close its sole U.S. manufacturing plant by the end of 2018 and open another in China.

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