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Broadcom Inc. (NASDAQ:AVGO), one of the large-cap tech stocks benefiting from the AI boom, recently reported impressive fiscal second-quarter results. The company reported revenue of $12.49 billion, beating analyst estimates of $12.03 billion, and earnings per share (EPS) of $10.96, beating analysts’ consensus estimate. analysts of 10.84 dollars.
The stock has rebounded strongly since the start of the AI boom, gaining 200% since January 2023 and 50% since the start of the year. Broadcom Inc’s market capitalization also increased to $804.05 billion, making it the 11th largest company in the world. While analysts recommend Broadcom Inc as one of the top AI growth stocks, dividend investors may wonder if it is a good income stock.
When determining the quality of a dividend stock, payment history is a key factor. High-income stocks have a long history of paying consistent and growing dividends. Broadcom Inc is a dividend producer with 11 years of consistent and increasing quarterly dividends.
The stock has maintained a compound annual growth rate (CAGR) of 12.87% over the past three years, 17.49% over the past five years, and 35.28% over the past decade. Broadcom Inc currently pays a dividend yield of 1.21%, which is higher than the industry average yield of 1.025% but lower than the S&P 500 long-term average of 1.85%.
Although the company’s 53% payout ratio and strong balance sheet prove dividend sustainability, its low dividend yield could make it less attractive to income-oriented investors. Broadcom Inc might be a good bet for those looking for capital gains, but it may not be the best choice for investors who rely on dividend income.
Income investors should generally look for stable companies with a history of superior dividend payments and yields above 5%. However, for those looking to invest in dividend growth, Broadcom Inc’s consistent and growing dividends could make it a solid choice for long-term portfolio growth.
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