NIKE, Inc. (NKE - Free Report) has time and again proved its commitment toward enhancing shareholder value, aided by its strong financial position. Apart from making regular dividend payments, the company has also made share repurchases to improve shareholder returns. Incidentally, over the last 14 years, the company has distributed and raised dividends regularly, alongside making share repurchases to improve shareholder returns.
Recently, the swoosh brand announced a 13% hike in its quarterly cash dividend to 18 cents per share. The new dividend, applicable for Nike’s Class A and B shares, will be paid on Jan 3, 2017, to shareholders on record as of Dec 5, 2016. Notably, this represents the company’s fifteenth consecutive year of dividend hike, further underscoring its healthy cash flows and robust potential.
Additionally, Nike repurchased 19 million shares for $1.1 billion in the last reported quarter, under its $12 billion share repurchase program approved in Nov 2015. With this, the company had repurchased about 39 million shares for roughly $2.2 billion under the program.
Apart from Nike, many other companies like Sysco Corporation (SYY - Free Report) , Tractor Supply Company (TSCO - Free Report) and Avis Budget Group, Inc. (CAR - Free Report) follow these practices to strengthen their commitment toward shareholders.
As part of some recent developments, Sysco Corporation announced a 6% hike in its quarterly dividend to 33 cents per share, which marked this food company’s 48th hike. Further, farm and ranch-store retailer, Tractor Supply raised its share buyback authorization by $1 billion, thereby bringing its current total authorization to $3 billion. Finally, car-rental company, Avis Budget announced an increase of $250 million to its buyback authorization, thus making shares worth nearly $400 million available for repurchase from Oct 1, 2016 onward.
Dividend hike is a prudent strategy used by companies with a stable cash position and solid future prospects. This is because dividend increases not only enhance shareholder returns but also raise the market value of the stock. Hence, companies bank on this strategy to bolster investors’ confidence in the stock, thereby persuading them to either buy or hold the scrip instead of selling it.
Coming back to Nike, we believe that its solid initiatives will not only help augment shareholder returns, but also enhance the company’s goodwill and enable it to tackle peer competition. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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