Dick’s Sporting Goods Dividend Faces Test as Free Cash Flow Dries Up
Dick's Sporting Goods has raised its dividend for years straight, but the Foot Locker acquisition has nearly wiped out free cash flow this year, and guidance cuts are piling pressure on the payout at the worst possible time.
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Dick’s Sporting Goods (NYSE:DKS | DKS Price Prediction) pays $1.25 per share each quarter, or $5.00 annualized. At $136.73, that works out to a yield of about 3.7%. The yield is that high partly because the shares are down 29.44% year to date. The Foot Locker deal is currently cutting into margins, cash and EPS, so income investors should ask whether the core retailer can carry the payout on its own.
A Raise Record Built Over Several Years
The dividend history backs up the reputation. The quarterly payout went from $0.4875 in 2022 to $1.00 in 2023, then $1.10 in 2024 and $1.2125 in 2025. The March 2026 increase was only about 3%, the smallest step in that run.
Free Cash Flow Has Thinned Out
In the fiscal year ended January 2026, operating cash flow was $1.62 billion and capex was $1.14 billion. That left about $481.6 million of free cash flow to cover $413.9 million in dividends. Through the first half of fiscal 2026, operating cash flow beat capex by only $48.8 million, while dividends were $224.75 million.
Cash fell 25.8% year over year to $913.7 million. The company had no debt on its $2 billion credit facility. Buybacks were zero in the second quarter, so the payout was protected and the repurchase program took the cut.
Earnings Coverage Still Holds
Management lowered its fiscal 2026 non-GAAP EPS guidance to $11.00 to $12.00, down from $13.50 to $14.50. Even at the lower range, the dividend takes about 42% to 45% of earnings. The core business continues to grow. Chief Executive Lauren Hobart said:
“Importantly, our growth outpaced the broader industry by nearly 200 basis points, reinforcing our ability to strengthen our leadership position and gain market share.”
Foot Locker is moving the other way. Its pro forma comps fell 3.6%, and the company now expects pre-tax charges of up to $750 million, with $516 million already recognized. Executive Chairman Ed Stack called it “temporary,” adding, “We’re going to go through a little bit of pain.”
How Academy and Nike Compare
Academy Sports and Outdoors (NASDAQ:ASO) pays a smaller $0.15 quarterly dividend. It raised its adjusted free cash flow outlook to $300 million to $350 million against capex of $200 million to $240 million. A light capex budget leaves Academy with plenty of room.
Nike (NYSE:NKE) shows why Foot Locker is under pressure. Nike’s revenue fell 4.3% to $11.21 billion, footwear sales dropped 6%, and the company expects fiscal 2027 revenue to decline high-single digits.
What a Spending Pullback Would Mean
For the DICK’S Business segment, guidance calls for $1.54 billion to $1.60 billion in profit. That compares with a Foot Locker loss of $80 million to $40 million. Management expects gross margin pressure to be most pronounced in Q3. If sporting goods spending slows, the company can pull back on capex, which is forecast at about $1.6 billion gross. Buybacks would be the next thing cut, ahead of the dividend.
Answer: The Core Business Can Fund the Dividend
The core DICK’S business makes enough to pay the dividend. The payout uses less than half of even the reduced earnings guidance. The weak spot is cash flow. Heavy spending and Foot Locker charges have left almost no free cash after capex this year, so investors should watch third-quarter cash flow and Foot Locker’s losses. Until both improve, expect small raises at best.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
