Sneaker manufacturing giant Nike (NYSE: NKE) is a consistently profitable company with a track record of dividend hikes. Does this mean you should put on your running shoes and rush out to buy Nike stock, though?
It is possible to generate $1,000 in dividend income from Nike stock if your account is big enough. After taking note of Nike's less-than-stellar recent financial performance, however, you may end up seeking income opportunities elsewhere.
Lacing up for $1,000 in dividend payouts
For what it's worth, Nike's annualized forward dividend yield of 1.75% beats the consumer cyclical sector's average yield of around 1%. Moreover, Nike has raised its quarterly dividend distributions by $0.03 per share each year since 2019.
You may be too late to buy Nike stock in time for the Sept. 3 ex-dividend date , but that should be fine if Nike continues its once-a-year $0.03-per-share dividend-raising pattern. In that case, the company's next four distributions would be $0.40 per share per quarter, or $1.60 per share annualized.
Hence, assuming payouts of $1.60 per share, you'd need to purchase 625 shares to get $1,000 in dividend distributions over the next year. If the Nike stock price is around $83, then you'd have to invest 625 x $83 or $53,125 and wait a year to receive $1,000 in cash payments.
A digital sales downturn
Nike's sector-beating yield is nice, but it's really just a consolation prize in light of the company's share price decline. Over the past year, Nike stock has lost value and underperformed the S&P 500 .
Notably, Nike's revenue was flat year over year in fiscal 2024, ended May 31, and the company's fourth-quarter revenue declined 2%. Nike's Q4 online sales took a hit, with Nike Direct revenue declining 8% to $5.1 billion owing primarily to a 10% fall-off in Nike Brand Digital revenue.
So, it's wise to wait and see if Nike can improve its digital sales trends. Otherwise, the potential $1,000 in dividends won't likely be worth the risk.
Should you invest $1,000 in Nike right now?
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David Moadel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy .
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