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Broadcom Inc (NASDAQ:AVGO), one of the large-cap tech stocks benefiting from the AI boom, recently posted impressive fiscal second quarter earnings. The company reported revenue of $12.49 billion, beating analyst expectations of $12.03 billion, and earnings per share (EPS) of $10.96, beating analysts’ consensus estimate of $10.84.
The stock has risen sharply since the start of the AI boom, gaining 200% since January 2023 and 50% year to date. Broadcom Inc’s market capitalization has also risen to $804.05 billion, making it the eleventh largest company in the world. While analysts recommend Broadcom Inc as one of the best AI growth stocks, dividend investors may wonder if it’s a good income stock.
When determining the quality of a dividend stock, payment history is an important factor. Top income stocks have a long history of consistent and increasing dividends. Broadcom Inc is a dividend performer 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 of 1.025%, but lower than the S&P 500’s long-term average of 1.85%.
While the company’s 53% payout ratio and strong balance sheet prove the dividend is sustainable, the low dividend yield could make the company less attractive to income-oriented investors. Broadcom Inc could be a good choice 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 pursue stable companies with a track record of superior dividend payments and yields above 5%. However, for those interested in dividend growth investing, Broadcom Inc’s consistent and increasing dividends could make it a solid choice for long-term portfolio growth.
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This article Should Dividend Investors Ride Broadcom Inc’s Tailwind? originally appeared on Benzinga.com
