Just Consider It

With its relatively low risk profile and a track record of dividend growth, Nike (NYSE: NKE) is a smart growth stock to consider. The company’s stock price has stagnated amid weak retail sector results, but there’s much to remain optimistic about. Direct-to-consumer selling, an ongoing program to buy back shares and a cost-cutting initiative should give the company some near-term earnings momentum, while its biggest growth drivers will likely come from international markets such as China and Western Europe. In China alone, there are 400 million people active in sports and exercise today, and Nike believes that the Chinese market will eventually expand to become more than 10 times the size of Nike’s North American consumer base. Nike’s dividend recently yielded 1.2 percent. That might not look like much, but Nike has increased its dividend annually for 16 years and has boosted its payout at an average annual rate of 15 percent over the last five years and 13 percent over the last decade. As it recently paid out just 32 percent of its earnings in dividends, there’s still plenty of room for further substantial increases down the line. Nike’s time-tested brand and unmatched supply chain network form a defensive moat that should help it capture growth in the apparel industry. It’s worth a closer look for long-term investors. (The Motley Fool owns shares of and has recommended Nike.)