Nike’s free cash flow fell $223M short of dividends in fiscal 2026, but its $8.4B cash reserve keeps the 24-year streak alive.
Lululemon pays no dividend while VF Corp pays just $0.09 quarterly, making Nike’s dividend commitment the most exposed among these peers.
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The dividend from Nike (NYSE:NKE) now yields about 4.48%. That figure is high because the stock has fallen 41.02% this year to $36.60. Retirees who hold Nike for income want to know one thing: will a run that reached its 24th consecutive year of increasing dividend payouts keep going while the business is still shrinking?
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NKE Price Target — 24/7 Wall St.
Nike usually announces its raise in November. It declared the first $0.41 payment on November 20, 2025 and the first $0.40 payment on November 14, 2024. This year’s decision lands close to a November investor day, where management plans to lay out a financial algorithm covering the following five years.
Raises Are Getting Smaller Every Year
The last raise added one cent a quarter. That sharp slowdown matters more for income investors than anything else on this list.
Free Cash Flow Fell Short of the Dividend
In fiscal 2026, Nike generated $2.868 billion in operating cash flow and spent $684 million on capital expenditures. That left $2.184 billion in free cash flow against $2.407 billion in dividends, a gap of $223 million. Coverage got worse in the first quarter of fiscal 2027, when free cash flow was negative $64 million and dividends cost $610 million.
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Against earnings, the annual dividend is $1.64, and adjusted EPS guidance is $1.15 to $1.35. That places the payout at 131.2% of earnings at the center of guidance, the kind of thin coverage that lands on every checklist of warning signs we flagged in our free dividend trap guide.
Buybacks Have Already Been Cut
Share repurchases dropped from $4.25 billion in fiscal 2024 to $146 million in fiscal 2026, even though Nike has an $18 billion plan. Nike is cutting buybacks to protect the dividend. CFO Dave Denton said on the October 1 call:
“Dividend is a very significant priority for us here at Nike. Under all scenarios, we have support for maintaining and ultimately growing the dividend over time.”
Nike can fund the shortfall from its $8.4 billion in cash and short-term investments, and it holds more cash than debt.
Sales Are Still Falling Before the Pace Savings Arrive
First-quarter revenue fell 4.3% to $11.21 billion, and Greater China dropped 22%. Gross margin improved 60 bps to 42.8%, but management expects discounts used to clear excess wholesale inventory to pressure margins. Nike expects fiscal 2027 revenue to fall by a high-single-digit percentage and operating profit (EBIT) to fall even more. Pace, Nike’s cost-cutting and restructuring program, targets $2.5 billion in savings, with most of them arriving in fiscal years 2029 and 2030. CEO Elliott Hill said:
“We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we’re taking deliberate actions to strengthen those businesses the right way for the long term.”
How Two Rivals Handle Cash
Lululemon Athletica (NASDAQ:LULU) pays no dividend and returns cash through buybacks, including $330.0 million in its second quarter. VF Corp (NYSE:VFC) pays just $0.09 a quarter while it works to reduce debt, on free cash flow of $405M in fiscal 2026. Nike has made a larger dividend promise than either company, so it has more to lose if it breaks the run.
Verdict: The Streak Should Survive, but Growth Will Stall
Yes, Nike will most likely keep raising its dividend, because its cash pile can cover the gap and management has tied its credibility to the run. However, investors should expect raises to stay about as small as the last one-penny increase through fiscal 2028. Real dividend growth will have to wait until the Pace savings come. Keep an eye on the November investor day for the five-year targets.
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