Nike Now Yields More Than Procter & Gamble and Twice as Much as Coca-Cola. Is It the Most Overlooked Dividend Stock? Here's the Clear Answer.

When the topic of dividend stocks is brought up, some of the most common names to be mentioned are consumer staples giants Coca-Cola (NYSE: KO) and Procter & Gamble (NYSE: PG). After all, they are both member of the Dividend Kings, an exclusive club that only includes companies that have boosted their payouts for 50 or more consecutive years.

The beverage giant has increased its payouts for 64 straight years, while the household and personal goods conglomerate has hiked its dividend payout for 70 consecutive years. At its current share price, Coca-Cola's dividend yields 2.2%, while Procter &Gamble's yields 2.7%.

Quietly in the background, however, is another company paying a dividend that outyields both of those: Nike (NYSE: NKE). Currently, Nike's payout yields a hefty 4.4%, offering a nice stream of income. That said, look deeper into that yield and you'll see there's definitely a catch.

The Nike dividend trap

On the surface, receiving a quarterly dividend of $0.41 per share on a stock that trades as of this writing at $37.13 per share looks like a favorable proposition. For a hypothetical example, owning 1,000 shares of Nike would provide quarterly income of $410, or an annualized payout of $1,640.

However, that high yield is the result of Nike's declining stock price, which makes it a symptom of wider problems. Nike is in the midst of attempting a turnaround -- one that was needed because it had fallen behind on innovation, wasn't keeping up with changing consumer tastes, and had made what turned out to be a strategic blunder: It pivoted its focus to selling products directly to customers via its own channels, rather than having them more widely available through the retail chains it had previously partnered with.

Current CEO Elliott Hill took over in October 2024 with a mandate to get the company back on track, but Nike is still figuring things out, as evidenced by its most recent quarterly results. In its fiscal 2027 first quarter, it reported revenue of $11.2 billion, which was a 4% decline from the prior-year period. Net income was down 2% to $712 million. In addition, Nike is guiding for its revenue for the fiscal year to decline by a high-single-digit percentage. Thus far in 2026, the stock price has reflected Nike's struggles, dropping 41.6%. And it's been even tougher for shareholders who've held on for a long time, with Nike's stock price dropping 76.7% over the past five years.

That's why, despite being a relatively high-yielding stock, I would avoid investing in Nike for now. The value of those dividend payouts is likely to be negated by a declining stock price, as there are few apparent near-term catalysts that could produce a rebound. And while the company has raised its payouts for 24 straight years, its last hike -- a $0.01 per share quarterly boost in late 2025 -- was smaller than usual. And if sales keep dropping, that could raise questions about whether the dividend payouts are sustainable or not. For reliable income and stable stock prices, I would consider owning shares of Coca-Cola and Procter & Gamble instead.

Picking reliability over higher yields

As the maker of everyday essentials found in homes across the world, from Crest toothpaste to Tide detergent, Procter & Gamble is one of the ultimate defensive stocks. While people may cancel subscriptions or cut back on eating out during difficult economic times, they aren't going to stop brushing their teeth or doing their laundry. While the company is staying in its lane, it's also providing upgrades and new product collections, and was also recognized by Fortune as the "Most Innovative Household Products Company" in 2026.

It seems like more investors are appreciating its defensive nature and reliability; P&G's shares are up 11.1% so far this year. While that slightly lags the S&P 500's 11.8%, P&G isn't known for its stock price appreciation, so that's relatively strong performance for the company, paired with a dividend that boosts its total returns.

Coca-Cola also isn't known for its stock price appreciation anymore, but it has handily outperformed the S&P 500 this year, with shares up 34.3%. It's finding success by offering twists within its traditional soda portfolio, with unit case volume growing 16% for its Coca-Cola Zero Sugar line in the second quarter. Unit case volume for its water, sports, coffee, and tea portfolios also grew by a combined 6%.

While Nike is struggling to recapture lost market share, Procter & Gamble and Coca-Cola are keeping their focus on what they do best and still keeping up with changing consumer tastes. Their business models are reliable, which is how they earned their positions as Dividend King titles -- and why shareholders can keep counting on their quarterly payouts.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.