Why Broadcom Inc. (AVGO) Is a Top Dividend Stock to Consider Now

Broadcom Inc. (AVGO) has emerged as a top choice for dividend investors, thanks to its consistent payout growth, attractive yield, and strong fundamentals. The company's diverse product portfolio, strategic acquisitions, and robust cash flow generation contribute to its dividend sustainability and growth potential. In this article, we will explore why Broadcom is an attractive dividend stock to consider now.



Broadcom's dividend growth track record is impressive, with the company increasing its payouts for 13 consecutive years. As of December 5, 2024, AVGO offers a quarterly dividend of $0.53 per share, yielding 1.18%. The company's 5-year compound annual growth rate (CAGR) for dividends is 10.5%, demonstrating its commitment to returning capital to shareholders.



Broadcom's consistent revenue growth is a key factor in its dividend sustainability. The company's revenue has grown by an average of 16.4% over the past year, driven by its diverse product portfolio and strong demand for its semiconductor solutions. This growth has enabled Broadcom to maintain a stable dividend payout and support its consistent dividend growth.

Broadcom's strategic acquisitions, such as VMware, have significantly bolstered its dividend growth potential. The integration of VMware has accelerated, with bookings surging 32% sequentially in Q3 2024. This acquisition is expected to boost adjusted EBITDA margins to 64% of revenue by the end of the fiscal year, driving increased cash flow and supporting Broadcom's consistent dividend growth.



Broadcom's strong balance sheet and low debt levels contribute to its ability to maintain and increase its dividend payouts. As of 2024, Broadcom has a market capitalization of $838.5 billion, with total cash and free cash flow of $111.1 billion and $25.98 billion, respectively. Its operating cash flow and EBITDA for the fiscal year ending 2023 were $19.19 billion and $22.96 billion, respectively. Broadcom's low debt levels, with a debt-to-equity ratio of 0.05, indicate a strong financial position, allowing the company to maintain and increase its dividend payouts.



Broadcom's diverse product portfolio and customer base contribute significantly to the stability of its dividend payments. The company offers a wide range of semiconductor and infrastructure software products, catering to various industries such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. This diversification reduces Broadcom's exposure to any single market or customer, ensuring a steady revenue stream and stable cash flow. Additionally, Broadcom's strong financial performance, with a market cap of $838.5 billion, a P/E ratio of 144.78, and a forward P/E of 28.99, further supports its ability to maintain and grow its dividend payments.

In conclusion, Broadcom Inc. (AVGO) is a top choice for dividend investors due to its consistent payout growth, attractive yield, and strong fundamentals. The company's diverse product portfolio, strategic acquisitions, robust cash flow generation, and strong balance sheet contribute to its dividend sustainability and growth potential. With a forward dividend yield of 2.89% and a payout ratio of 33.3%, Broadcom is an attractive option for income-oriented investors seeking a reliable and growing dividend.