Broadcom Inc's Dividend Analysis
Assessing Broadcom Inc's Upcoming Dividend and Its Historical Performance
Broadcom Inc (NASDAQ:AVGO) recently announced a dividend of $5.25 per share, payable on 2024-03-29, with the ex-dividend date set for 2024-03-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Broadcom Inc's dividend performance and assess its sustainability.
What Does Broadcom Inc Do?
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Broadcom Inc is the sixth-largest semiconductor company globally and has expanded into various software businesses, with over $30 billion in annual revenue. It sells 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets. It is primarily a fabless designer but holds some manufacturing in-house, like for its best-of-breed FBAR filters that sell into the Apple iPhone. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments. Broadcom Inc is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as Brocade, CA Technologies, and Symantec in software.
A Glimpse at Broadcom Inc's Dividend History
Broadcom Inc has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a quarterly basis. Broadcom Inc has increased its dividend each year since 2011. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Broadcom Inc's Dividend Yield and Growth
As of today, Broadcom Inc currently has a 12-month trailing dividend yield of 1.56% and a 12-month forward dividend yield of 1.71%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Broadcom Inc's annual dividend growth rate was 12.30%. Extended to a five-year horizon, this rate increased to 19.50% per year. And over the past decade, Broadcom Inc's annual dividends per share growth rate stands at an impressive 41.00%.
Based on Broadcom Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Broadcom Inc stock as of today is approximately 3.80%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-01-31, Broadcom Inc's dividend payout ratio is 0.47.
Broadcom Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Broadcom Inc's profitability 9 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Broadcom Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Broadcom Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Broadcom Inc's revenue has increased by approximately 14.00% per year on average, a rate that outperforms approximately 60.63% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Broadcom Inc's earnings increased by approximately 87.50% per year on average, a rate that outperforms approximately 91.54% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 20.80%, which outperforms approximately 57.92% of global competitors.
Next Steps
In conclusion, Broadcom Inc's commitment to increasing dividends, combined with a healthy payout ratio, robust profitability, and strong growth metrics, paints a promising picture for current and prospective investors. The company's ability to consistently grow dividends while maintaining financial stability is a testament to its strategic initiatives and competitive position in the market. As value investors consider their next moves, Broadcom Inc's track record and forward-looking indicators suggest it could be a compelling addition to a dividend-focused portfolio. Will Broadcom Inc continue its impressive dividend growth streak, and how will this influence your investment strategy?
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
