In an attempt to enhance shareholder value, Nike, Inc. (NKE – Analyst Report) recently hiked the quarterly dividend on its Class A and B shares by 14% to 24 cents per share. The company’s annual dividend now stands at 96 cents.
The new dividend is payable on Jan 6, 2014 to shareholders of record as of Dec 16, 2013. The enhancement in the dividend is attributable to Nike’s strong performance during the year, with the stock price jumping nearly 52.2% year to date.
This is the twelfth consecutive year of Nike’s annual dividend increase, depicting its commitment towards enhancing stockholder value.
This global sport equipment and apparel retailer has been consistently paying dividend since 1984. The company last hiked its quarterly dividend to 21 cents from 18 cents in 2012, reflecting an increase of approximately 16.7%.
Dividend hike is quiet frequent among companies with a stable cash position and healthy cash flow. Apart from Nike, many other firms have raised their quarterly dividends in the recent past. These include Snap-on Inc. (SNA – Analyst Report), Sysco Corporation (SYY – Snapshot Report) and Halliburton Company (HAL – Analyst Report) that raised their dividends by 15.8% to 44 cents, 3.6% to 29 cents and 20% to 15 cents, respectively.
Dividend hikes not only enhance shareholder’s return but raise the market value of the stock. Through this strategy, the companies bolster investors’ confidence on the stock, thereby persuading them to either buy or hold the scrip instead of selling them. Looking ahead, Nike remains confident of its growth potential, suggesting enhanced value for shareholders.
This Oregon based retailer, is expected to announce its second-quarter fiscal 2014 earnings on Dec 19, 2013. Our proven model doesn’t conclusively show that Nike is likely to beat the Zacks Consensus Estimate this quarter. This is because the company carries a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00% and for a stock to outperform, it needs both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3.