Nike’s Dividend Now Pays Like a Treasury. Here’s What Could Put It at Risk
Nike's stock has fallen so far that its dividend now rivals government bonds, but the payout is already consuming more cash than the company generates. Whether that streak survives the next few months depends on three specific signals worth watching…
Nike (NYSE:NKE | NKE Price Prediction) has fallen far enough that its dividend now competes with government bonds. Shares traded at $37.60 on Tuesday. That is down 39.41% year to date and 43.79% over the past year. The $1.64 annualized payout yields about 4.36% at this level, close to the 5.00% 10-year Treasury yield. So the question for income investors is whether the payout can survive the turnaround.
A 24-Year Streak Faces Its Toughest Test
Nike’s record holds up. Fiscal Q3 2026 marked its 24th consecutive year of dividend increases, and the quarterly rate has climbed from $0.16 in early 2016 to $0.41 today. The latest raise was small, from $0.40 to $0.41, and the company declared it on November 20, 2025. Nike has announced its raise in November three years running, so the next decision is only weeks away.
On the October 1 earnings call, the CFO, Dave Denton, sounded firm:
“Under all scenarios, we have support for maintaining and ultimately growing the dividend over time.”
Coverage Math Falls Short for Now
Nike guided fiscal 2027 adjusted EPS to $1.15 to $1.35, which excludes about $0.15 of Pace restructuring charges. Set against the dividend, that puts the payout at roughly 121% to 143% of adjusted earnings.
Cash flow is weaker still. In fiscal 2026, operating cash flow of $2.868 billion minus $684 million in capex left about $2.184 billion of free cash flow. Dividends took $2.407 billion. In fiscal Q1 2027, operating cash flow was $135 million, capex was $199 million, and dividends cost $610 million. Buybacks have mostly stopped. Nike bought back only $123 million of stock in fiscal 2026, despite an $18 billion authorization.
Balance Sheet Buys Time That Peers Lack
Nike ended the quarter with $8.4 billion in cash and short-term investments and a net cash position. Denton put it simply: “Our balance sheet remains very strong.”
Under Armour (NYSE:UAA) shows what a stretched balance sheet looks like. It pays no dividend, and its cash fell 56.53% year over year last quarter. Lululemon (NASDAQ:LULU) returns capital through buybacks instead, spending $330.0 million on them last quarter. Of the three, only Nike asks income investors to stay with it through a reset.
Pressures That Could Break the Payout
Revenue of $11.21 billion missed expectations of $11.32 billion. Greater China fell 22%, and Converse dropped 28%. Management expects China to get worse:
“The guidance range that is provided to you assumes that China actually gets worse from a revenue perspective for the balance of this year.”
Pace brings about $1.0 billion in restructuring charges through fiscal 2031, and management said it will “reduce the overall number of roles across Nike Inc.” Most of the savings won’t show up until fiscal 2029 and 2030. On Mad Money, Jim Cramer warned that “often, super high yields are a signal that the payout simply can’t be maintained.”
Signals to Track Before the Next Declaration
Three things will show where the dividend is headed. The first is November’s declaration: a 25th annual raise or a freeze. The second is the November investor day, where Denton promised a framework covering “the next five years.” The third is free cash flow. If operating cash keeps falling short of the roughly $610 million quarterly dividend and reserves shrink, a freeze is the likely first move. A cut would only become a real risk if China and Sportswear keep falling into fiscal 2028.
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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.
