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Nike is renowned for its iconic sneakers, but it also manufactures a wide range of athletic gear and apparel. This has contributed to strong performance, with Nike reporting $68.5 billion in revenue for fiscal year 2023, a 10% increase from the previous year.
Over a 20-year period (January 2001 to January 2021), Nike's stock price surged by approximately 2,000%, climbing from $8.73 to over $180 per share. Currently, Nike trades around $138 per share, with a 52-week high of $175.72.
If you're looking to incorporate Nike into your investment strategy, here's a guide to help:
- Choose a Brokerage
To invest in Nike, you'll need to open a brokerage account. Look for platforms with no trading fees and low investment minimums. Depending on your goals, you might opt for a taxable account, which offers flexibility without contribution limits or penalties for withdrawals.
- Determine Your Investment Amount
Before investing in Nike, consider the following:
- Budget: Ensure essential expenses and retirement savings are accounted for before allocating funds toward stock investments.
- Share Price: Nike shares can be expensive, but brokerages offering fractional shares allow you to invest in portions rather than whole shares.
- Investment Strategy: Dollar-cost averaging is a popular approach where you invest fixed amounts regularly, helping to lower the average cost per share over time.
- Portfolio Fit: Nike is considered a "core holding" due to its stability, but it's important to diversify your portfolio with a variety of companies and sectors to minimize risk.
- Research Nike’s Financials
Before purchasing any stock, research its financial performance and stability. Nike offers two share classes, but only Class B shares are publicly traded. Class A shares are primarily held by the founding family and have voting control over the company.
- Place an Order
Once ready to invest, log into your brokerage account, search for Nike’s ticker symbol (NKE), and specify the number of shares or amount to invest. You can choose between market orders, which execute at the current price, or limit orders, which wait for a specific price to be reached.
- Avoid Currency Conversion Fees
When trading U.S. stocks from Canada, currency conversion fees apply when buying and selling. These can be reduced by maintaining a U.S. dollar bank account or using a technique called Norbert’s Gambit, which involves converting Canadian shares into U.S. shares to avoid conversion fees.
- Understand Tax Implications
For Canadian investors, dividends from U.S. stocks are subject to a 15% withholding tax. Capital gains are taxable in Canada, with only 50% of the gain subject to tax. However, U.S. real estate-based investments may incur additional U.S. taxes.
- Selling Nike Stock
When it’s time to sell, simply log into your brokerage account, enter the ticker symbol, and choose the number of shares to sell. If significant profits are involved, it may be worth consulting a tax professional to minimize capital gains taxes.
By following these steps, you can begin investing in Nike and potentially benefit from its long-term growth.
