Early this week I added to my position in Nike (NKE). NKE has been range bound over the past year, trading between $50 and $60. With it now trading near the low end of that range, I decided to pick up some additional shares, and lower my cost basis per share. This is my 2nd add-on to the original position I initiated back in April 2016. NKE does not sport a high yield (~1.4%), but I expect NKE to be one of the better growth companies within my portfolio. Since I’ve owned NKE, my growth expectations for the company haven’t been realized, but I’m going to be patient. Here are the transaction details…
NKE
On 10/9/17, I purchased 25 additional shares at $51.57/sh, for a total of $1,289.25.
This position is now at 126.723 shares, with an average cost of $56.05.
This purchase results in an additional $18.00 in annual forward dividend income.
Do you like NKE at this level? Is there an alternate stock in the Consumer Discretionary sector you like better? Are you worried about Nike’s competition from Adidas or Under Armour? Please share your thoughts…
Just out of curiosity: On what do you base your expectancy of high dividend growth?
Hey Mr. Robot,
It wasn’t high dividend growth that I was referring to, but rather earnings growth, and this is relative to the other holdings in my portfolio. For the next 5 years, I’m estimating about 10%-12% earnings growth for NKE. A good deal of this expectation is based on their historical earnings growth, and some based on analyst expectations. Over the past 10 years (2007-2016), NKE has delivered about 13% earnings growth. Moving forward, as NKE gets bigger, I do not expect NKE to continue that rate of earnings growth, hence my reduced numbers.
As for the dividend growth, NKE has normally announced dividend increases in November. If they do so next month, I might expect a 2 cent increase (at best, given current company performance) to $0.20 per quarter based on the increases they’ve delivered over the past few years. This would be about an 11% increase.
I hope I answered your question… thanks for stopping by and commenting!
That was the exact response I was hoping to get. A well thought out and analytical reply. Thanks for sharing your insights good sir! 🙂
I love Nike and plan to own shares very soon. great buy !!
Great purchase! I’m also looking to initiate a position in Nike, but I hoped for a better entry below $50 (and even then it couldn’t be considered as “cheap”). As we can see right now, my price target was a little bit too ambitious.
I also like your followup on earnings growth in the comments, that’s exactly why Nike is always expensive.
Hi DivRider, you may still get your chance to enter below $50, especially if the stock market has a correction. Glad you could stop by to comment. Hope to see you again.