Nike (NKE +0.49%) stock has really been suffering. The active-wear giant, which is the largest company of its kind by far, has seen its stock plummet 75% from its all-time high. Worse, it's still in the midst of figuring out how to turn around, so a stock rebound may still be far out on the horizon.
In general, it's a good idea to wait for progress before buying a turnaround stock. But Nike has something else going for it: an excellent dividend. Is that enough of a reason to buy it right now?
Nike x Melitta Baumeister Vomero Premium Pile. Image source: Nike.
The brand to beat in activewear
Nike is one of the largest apparel companies in the world, and it's far ahead of the competition in the athletic wear space. Consider its revenue in comparison with Adidas, Lululemon Athletica, Under Armour, and On Holding.
NKE Revenue (TTM) data by YCharts
It has incredible brand power, and despite recent woes, it remains the No. 1 brand in both footwear and clothing in Piper Sandler's annual Taking Stock With Teens survey. That's an excellent indication of the company's future opportunity.
Can Nike withstand the competition?
The cracks are starting to show, though. It used to have more sales than most of its competition combined, but that's not the case right now. Here's the arc of sales over the past five years.
NKE Revenue (TTM) data by YCharts
Newer companies like On are resonating with an upper-income clientele that's still spending under pressure, and older competitors, like Berkshire Hathaway's Brooks, developed an edge in the sport segment while Nike was focused on lifestyle and reliable franchises that turned out not to be so reliable.
New CEO Elliott Hill has crafted a strategy that's rooted in a return to sport and speed in innovation. Management also walked back its disastrous breakup with wholesalers, which was one of the ways competitors were able to reach more customers; without Nike products on the shelves, shoppers reached for alternatives.
NYSE: NKE
Key Data Points
There have been several bright spots so far on the journey back. In the 2026 fiscal third quarter (ended Feb. 28), revenue was flat from last year instead of declining, and wholesale revenue increased 5%. The running category was up 20%, and the global football segment was also up double digits.
Is the dividend enough?
While this is playing out, Nike continues to increase the dividend. And since yield moves conversely with stock price, the yield has climbed from around 1% historically to about 3.8% right now.
Nike is a blue chip dividend stock that has raised its dividend for 24 years, even under rough conditions. I do think that it's reliable enough for passive income investors to buy it today, and if you have a long time horizon, you also have the opportunity to see the stock rebound.
