Nike (NYSE: NKE), one of the blue chip dividend stocks, has raised its dividend for 24 consecutive years. It also has a forward yield of 4.4%, making it a dividend stock with a moderately high yield. That yield may look like an opportunity, but it’s more likely a warning sign.
Why? With earnings forecasts unable to cover the dividend until at least 2027, shares remain at high risk of a dividend cut. As low-risk 10-year Treasuries yield over 5% and Nike’s turnaround timeline remains highly uncertain, the risk simply isn’t worth the payoff for dividend investors for now.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
What it takes to earn $2,000 in annual dividends from Nike shares
Based on Nike’s current quarterly dividend of $0.41 per share, the stock pays $1.64 per share annually. To generate $2,000 in annual dividend income, you would need to own around 1,220 shares. At today’s stock price, it would require a $45,445 investment. However, putting that amount of capital to work in Nike shares requires taking current interest rate trends into account.
With the 10-year Treasury yielding around 5.15%, you could generate $2,340 per year, or an additional 17%, from this low-risk alternative. Even as Treasuries lack the long-term upside that stocks typically provide, consider the root cause of Nike steadily moving toward becoming one of the high-yield dividend stocks in the first place.
That would be the stock’s 77% price drop over the last five years, coupled with continued dividend raises. Management has prioritized cash payouts, even as numerous headwinds and turnaround challenges continued to hinder the company’s fiscal results.
Uncertain turnaround prospects call into question making this a buy
For years, issues ranging from growing competition in China to the impact of inflation and tariffs on production costs have affected Nike’s operating performance. As dividends kept rising, shares remain at risk of a further dive if management decides to reduce or eliminate it to conserve cash.
Although management remains highly committed to maintaining the dividend, given how it’s expected to exceed estimated earnings in both 2026 and 2027, something may have to give. At the very least, the company needs to go from having a few green shoots, such as strengthening North American sales, to stabilizing and improving overall results.
