<\/p>\n
On Oct. 14, 2016, Broadcom shares traded at $17.01. So, a $10,000 investment in the tech stock would have let you purchase $588 shares. <\/p>\n
Back then, the chip giant paid shareholders an annual dividend of $0.20 per share. So, you would have earned $117.6 million in annual dividends, for a yield of just 1.17%. <\/p>\n
Ten years later, that stake is worth $273,588.57 if we adjust for dividend reinvestments. Notably, with every cent of dividend reinvested, you would own 766 shares today. <\/p>\n
In October 2026, the company pays shareholders an annual dividend of $2.60 per share, which translates to $1991 in annual dividends. So, the yield-on-cost has increased to almost 20% over the last 10 years. <\/p>\n
The Broadcom (AVGO) stock price has risen 2,637% cumulatively, or at a compound annual growth rate of 39.21%. <\/p>\n
Also Read: Broadcom CEO echoes Warren Buffett with warning for investors<\/p>\n
Over this period, the $10,000 position held about 30% more shares than the original purchase due to dividend reinvestments.<\/p>\n
If we do not reinvest dividends, the yield-at-cost falls to 14.9%, given the annual dividend will be around $1,493. <\/p>\n
Broadcom dividend key ratios<\/p>\n
Payout ratios below are calculated from figures Broadcom reported for the third quarter.<\/p>\n
Quarterly dividend: $0.65 per share<\/p>\n
Annual dividend: $2.60 per share<\/p>\n
Dividend yield in 2026: 0.73%<\/p>\n
10-year yield on cost: 19.4% with reinvestment, 14.9% without<\/p>\n
Annual dividend expense: $12.4 billion<\/p>\n
Estimated FCF in fiscal 2026: $49 billion<\/p>\n
Dividend payout ratio: around 25%<\/p>\n
Broadcom is generating enough cash to continue its dividend hikes. <\/p>\n
Given consensus estimates compiled from TIKR, analysts tracking the tech stock project free cash flow to grow from $26.91 billion in fiscal 2025 (ended in October) to $$49 billion in 2026 and $197 billion in 2030. <\/p>\n
At a 25% payout ratio, the company’s annual dividend could surpass $10 per share by 2030. <\/p>\n
It means the yield-on-cost could eventually surpass 80% even without a dividend reinvestment plan. <\/p>\n
The cash behind Broadcom’s payout<\/p>\n
Valued at a market cap of $1.70 trillion, Broadcom is among the world’s largest semiconductor companies. <\/p>\n
Despite its massive size, Broadcom continues to grow at an enviable pace. <\/p>\n
In fiscal Q3, it reported record revenue of $29.6 billion, up 86% year over year. Artificial intelligence chip sales more than tripled to $16.7 billion. <\/p>\n
Its operating margin stood at 68%, while free cash flow surged to a record $13.7 billion.<\/p>\n
The company paid $3.1 billion in dividends during the quarter, less than a quarter of its free cash flow.<\/p>\n
What Hock Tan says about Broadcom’s cash<\/p>\n
The key question for investors is what comes next.<\/p>\n
At the Goldman Sachs Communacopia + Technology Conference on Sept. 8, Broadcom CEO Hock Tan said Broadcom will end October with a record amount of cash, stating:<\/p>\n
“So we’re going to generate a lot of cash.”<\/p>\n
The board could raise the dividend or buy back stock using this cash pile. <\/p>\n
Paying down debt makes less sense to Tan because the company took on the debt when interest rates were much lower. CFO Amie Thuener put the weighted average coupon at 4%.<\/p>\n
How much of FCF would go to dividends is “still a long way off,” Tan said without committing to anything. <\/p>\n
“Well, give me three months,” he told the audience.<\/p>\n
The board usually settles capital allocation at its December meeting, and Broadcom reports fourth quarter results on Dec. 9.<\/p>\n
Hock Tan, the CEO of Broadcom, is bullish on AI demand. <\/p>\n
Bloomberg \/ Getty Images<\/p>\n
Is Broadcom stock still a good buy?<\/p>\n
Investing in quality dividend stocks allows you to generate a recurring income stream and long-term capital gains. <\/p>\n
Moreover, the best dividend stocks like Broadcom consistently increase dividends each year. <\/p>\n
“Going back to 1960, 85% of the cumulative total return of the S&P 500 Index can be attributed to reinvested dividends and the power of compounding,” according to a Hartford Funds report, <\/p>\n
More Dividend Stocks:<\/p>\n
2 dividend stocks that pay you more than the 10-year Treasury note<\/p>\n
Jim Cramer issues blunt warning on high-dividend stocks<\/p>\n
How much to invest in Ford stock to earn $500 in annual dividends<\/p>\n
So, let’s see if AVGO stock is still a good buy. <\/p>\n
If Broadcom trades at 20x forward FCF, below its current 22.5x multiple, it could more than double in the next three years. <\/p>\n
Of the 29 analysts covering Broadcom stock, 27 recommend “Buy,” and two recommend “Hold.” The average Broadcom price target is $519, suggesting 45% upside from current levels. <\/p>\n
However, the yield-on-cost shows how Broadcom has performed in the past decade. The tech giant will not be able to replicate that performance going forward. <\/p>\n
Broadcom also relies on six custom-chip customers, indicating heavy customer-concentration risk. <\/p>\n
Basically, Broadcom remains a top buy for investors who remain bullish on the AI trade. <\/p>\n
More Stocks NewsBank of America just drew a line in the sand for the stock marketSix Flags stock sinks as tragedy shuts coasters before HalloweenAmazon’s $550 tablet breaks its oldest hardware ruleIntel CEO says ‘good enough’ Chinese models are winning on price#Broadcom #investment #pays #year #dividends<\/p>\n","protected":false},"excerpt":{"rendered":"
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