A stock that has lost 79% of its peak value usually signals trouble. Nike (NYSE: NKE) is in exactly that position, and the slide has pushed the company's dividend yield, the annual cash payment to shareholders expressed as a percentage of the current share price, to roughly 4.5%. That is the highest level in Nike's history, and it has drawn attention from investors who buy stocks for income rather than growth.
The company's shares are also down about 34% over the past ten years, a stretch in which key growth strategies largely missed their targets.
What drove the decline
The most visible problem is China. Revenue from Nike's Greater China segment fell 11% year over year in the most recent quarter, and a near-term recovery looks unlikely. The company has been losing ground to domestic Chinese brands, and a shift in consumer preference at that scale is not quickly reversed.
The other setback came from a strategic call on distribution. Nike leaned heavily into direct-to-consumer sales, cutting out retail intermediaries to sell directly through its own channels. The logic seemed sound: fewer middlemen, better margins. The side effect was that retail partners reduced how prominently they featured Nike products, and rival brands used that gap to expand in the U.S., Europe, and other markets.
What the balance sheet actually shows
Despite the pressure, Nike is still posting profits. The company held roughly $9 billion in cash and equivalents at the end of last quarter, against approximately $11 billion in debt. By standard measures, that is not a distressed balance sheet.
Nike also carries a 24-year consecutive streak of annual dividend increases. There is a reasonable chance the company extends that to 25 years before the end of 2026, though any increase is likely to be modest given depressed earnings. Analyst Keith Noonan, who authored the underlying analysis, calls a dividend cut a real possibility if annual earnings continue to fall.
Noonan characterizes the stock as a worthwhile buy for long-term dividend investors at current prices but flags significant execution risks. The company remains profitable and is still raising its payout, but the revenue decline in Greater China and the erosion of retail shelf space have not been resolved.