Nike Inc. (NKE) boosted its quarterly dividend by 25 percent on Monday, citing strong cash flow and growth prospects as the world's biggest athletic shoe company has racked up record revenue and soaring profits the past few years.
The company, which last week said Nike (search) co-founder Philip Knight (search) would hand over the chief executive's position to an outsider, raised its dividend to 25 cents per share from 20 cents.
Analysts said neither the raised dividend, payable Jan. 3 to shareholders of record on Dec. 13, nor the new chief executive would likely change the company's acquisition strategy to look beyond its core U.S. shoe business to boost sales.
"I would think the dividend would not affect them at all in their growth plan, such as acquisitions," said Jeffrey Thomison, an analyst at Hilliard Lyons.
"The company generates enough free cash flow to pay dividends and repurchase shares if they choose too and especially make acquisitions as they see fit."
The increased payout to shareholders marks the third such boost over the past three years, the company said. Last November, Nike raised its quarterly dividend to 20 cents following an increase to 14 cents in 2002.
It comes after Nike last Thursday named William Perez, who ran privately held consumer products company S.C. Johnson & Son Inc., to replace Knight effective Dec. 28 after more than a year-long search.
Analysts have said the decision to name an executive with experience managing different brands made sense because the mature U.S. athletic shoe market, where Nike holds a roughly 40 percent share, has forced the company to look beyond its core U.S. shoe business to boost sales.
Perez worked at S.C. Johnson for 34 years and had served as chief executive officer since 1996. The company's products include Pledge furniture polish, Edge shaving gel and Ziploc plastic bags. S.C.
Johnson currently generates $6 billion in annual sales.
Nike shares were trading up $1.19 at $83.69 near an all-time high in late afternoon trading on Monday.