Nike Hikes Dividend 43%

Nike(NKE Quote) raised its quarterly dividend to 20 cents from 14 cents, saying it thinks current cash flow levels are sustainable.

The shares were recently up $1.11, or 1.7%. to $64.42.

"Nike has delivered very strong cash flow, and over the past five years, the company has returned approximately 25% of this cash flow to shareholders through dividends," the company said. "This is the second consecutive year that we've increased our dividend, which reflects our confidence in our cash-flow generation, solid balance sheet, and the strong overall growth prospects for our business."

At $64.15, Nike's shares yield 1.2%, compared with 0.87% before the change. With about 165 million shares outstanding, the company will pay about $33 million in quarterly dividends, an increase of 44% over the $23 million previously. The company earned $261 million, or 98 cents a share, on revenue of $3 billion in its first fiscal quarter reported on Sept. 19. The 20-cent dividend represents about 5% of net income.

Competitor Reebok (RBK Quote)pays a twice-yearly dividend of 15 cents a share. Based on the current share price of $38.37, its dividend yield is 0.78%. With about 59 million shares outstanding, the company devotes $4.5 million per quarter to dividends. The company earned $63 million, or 96 cents a share, on revenue of $1 billion in its third fiscal quarter reported on October 23. The dividend represents just over 7% of net income.

Nike's stock is now trading near its 52-week high of $64.93 and is up 40% for the year. Reebok is also trading near its 52-week high and is up 24% for the year.