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Key Takeaways:
- Nike offers a 2.17% dividend yield, near the top of its 5-year range and well above its 1.3% average.
- Analysts forecast Nike’s earnings could grow 12% annually through 2028, and dividends could rise 6% per year over the same period.
- Based on TIKR’s valuation model, the stock could deliver 19% upside over the next 3 years, with a target price of ~$91/share.
Nike is the world’s largest athletic footwear and apparel company, known for its iconic Swoosh logo, massive global presence, and powerful athlete endorsements.
While recent earnings have declined due to inventory challenges and sluggish consumer demand in China, Nike has been cutting costs and focusing more heavily on its direct-to-consumer strategy, which could help improve margins over time.
Shares are down over 20% from their recent highs, but analysts think the worst may already be priced in. That has pushed the dividend yield higher and created a potentially attractive entry point for long-term investors looking for brand power, global scale, and a growing payout.
Analysts Think the Stock is Undervalued Today
Nike shares currently trade around $76/share, but based on TIKR’s guided valuation model with assumptions derived from analysts’ consensus estimates, the stock could reach ~$91/share by May 2028.
That implies +19% total returns, or about 6% annually, if the company returns to mid-single-digit annual revenue growth.
The projection assumes operating margin expansion back toward historical levels and continued growth across Nike’s direct-to-consumer and digital sales channels.
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Nike’s 2.17% Dividend Yield Looks Attractive at Today’s Prices
Nike’s forward dividend yield sits at 2.17%, which is well above its 5-year average of 1.32% and close to the 3% high the stock recently offered.
This elevated yield has been driven by a combination of two forces: continued dividend growth and a declining stock price. While Nike has consistently raised its dividend over the past five years, its share price has fallen significantly from recent highs. That combination has pushed the yield to one of its most attractive levels in years.
However, it’s important to recognize that this yield spike isn’t just a gift. It reflects the market’s concerns about decelerating revenue, compressing margins, and ongoing challenges in China and other key markets. Inventory management issues and rising competition from smaller, more agile brands have also weighed on sentiment.
Long-term investors may still find value here, but only if they’re comfortable riding out the volatility and believe Nike can regain its growth momentum.
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Dividend Looks Safe With Room to Grow
Nike is expected to earn $2.16 per share and pay out $1.57 in dividends in fiscal 2025, putting the payout ratio at a healthy 73%.
This spike in payout ratio doesn’t signal danger, but it does reflect a business under some pressure. EPS is expected to decline sharply from $3.95 in the year ended May 2024 to just $1.67 in the year ending May 2026, driven by margin compression, softer demand in China, and elevated promotional activity in North America.
Looking ahead, analysts expect earnings per share to gradually recover, rising to $2.48 in 2027 and $3.00 by 2028. Dividends are projected to grow more slowly, from $1.57 to $1.88 over the same time, keeping the payout ratio in the 63–73% range. That translates to:
- Roughly 12% EPS CAGR from 2025 to 2028 (off a low base)
- 6% annual dividend growth, slower than historical norms
Future growth is expected to come from Nike’s digital transformation, direct-to-consumer expansion, and continued innovation across core franchises like Air Max, Jordan, and ZoomX. The brand is also building momentum in international markets such as China and India, where long-term consumer demand remains strong.
With 22 consecutive years of dividend increases and a portfolio of iconic products fueling long-term growth, Nike remains a solid pick for investors seeking a balance of income and brand-driven appreciation.
However, a 73% payout ratio also means Nike has less margin for error. If earnings disappoint or global demand softens further, future dividend hikes could slow or stall. While not immediately alarming, it is a sign that dividend growth may be more modest than it was in the past decade.
Long-term investors should feel confident in the dividend’s safety, but should not expect explosive growth from here. This is a maturing business in a competitive space, dependable and globally trusted, but likely to grow at a steadier pace.
See Nike’s full growth forecast and analyst estimates. (It’s free) >>>
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
