Nike

From running shoe seller to trendsetter

The health trend keeps growing. More and more people are paying attention to a healthier diet and less stress in everyday life, and are doing more sports in their free time. It's no secret that lazy people get sick faster and more severely than more active people. It doesn't have to be an extreme sport - it's already enough if, instead of watching TV in the evening, you take another walk around the block or, if possible, ride your bike to work instead of driving. How about taking the stairs instead of the stuffy elevator? So: there are plenty of options - no room for excuses here!

The world market leader for sportswear, Nike, is benefiting from exactly this ongoing trend. And chances are very good that this trend won't break off in the coming years either.

The history and business model of Nike Inc.

Nike's story begins in June 1964, when Philip Knight founded the company Blue Ribbon Sports. By his own account, he was a "moderately good middle-distance runner" and knew he didn't have what it takes to be a pro athlete. But he still wanted to make his money with sports. So he sold Japanese running shoes from the company Onitsuka Tiger, which later renamed itself Asics. Demand was huge, so he soon had to hire additional staff. His former running coach Bill Bowerman, who tinkered with shoes himself to increase efficiency, offered him a partnership, and Knight agreed.

It wasn't until 1971 that they appeared under the name Nike (the name of the Greek goddess of victory) and made their own running shoes for the first time. Their shoes were much lighter, more comfortable and had a better sole profile than the usual athletic shoes from the competition. But business was rather sluggish, since nobody wanted an unknown shoe from Nike. At the time, the world-famous kicks from adidas were all the rage.

Nike gradually began sponsoring athletes. That's how they made a name for themselves, first in track and field and later in basketball. When Nike signed Michael Jordan in 1984 and released its own collection together with him, the real rise into the big leagues began. To this day, it's estimated that the partnership with Jordan has brought in around 2.6 billion US dollars in sales.

Nike has long since stopped producing just running shoes and now provides athletes with their complete outfits. But apart from sports, the products are also very popular in everyday life. Fashion fans stand in line for hours to be the first to buy the new sneakers. For Nike, of course, that's a gold mine that's far from exhausted.

What does Nike have planned for the future?

It can be assumed that more and more people around the world will be doing sports in the coming years. That secures the rising sales of the world market leader. Nike has also become very digital recently. For example, it provides its own sports apps for your phone, which you can use to analyze your running training, among other things. Of course, ads for new products are also shown regularly there. There's also a partnership with Apple, which produced the Apple Watch Nike+. This way, Nike ties its fitness-enthusiast customers even more closely to itself.

Is the stock worth it for dividend investors?

Yes, absolutely. Nike has been paying a dividend to its shareholders since 1984. Since 2003, it has also been increased by around 14% every year. With that in mind, the current dividend yield of 1.1% doesn't look all that measly. The company currently pays out 32% of its profits, so there's still a lot of money left in the company to keep growing on its own and to invest in new products. With 16 years of consecutive dividend increases, Nike is one of the Dividend Achievers.

Conclusion:
Nike is a forward-looking company that always keeps an ear to the customer. Thanks to a huge fan base, new fashion trends can be established quickly. Business is much more profitable than at some other sporting goods manufacturers, and the dividend shows very attractive growth. So the stock is a great investment, and not just for sports fans.