August 21, 2025 a 11:31 am
AVGO: Dividend Analysis - Broadcom Inc.
Broadcom Inc. (AVGO) represents a robust investment opportunity with its stable dividend history and consistent growth over the years. Despite a relatively modest dividend yield, the company showcases a strong commitment to returning value to shareholders through its continued dividend payments. The impressive dividend growth, coupled with sound financials, signals potential for sustained pay-outs and aligns with investor expectations for long-term profitability.
📊 Overview
Broadcom Inc. operates in the technology sector, offering an enticing blend of dividend yield and growth supported by solid earnings. As of now, the dividend yield stands at 0.92%, calculated on its market capitalization and shares outstanding. The current dividend per share is $2.12, with a commendable history spanning 16 years without any recent reductions or suspensions.
| Aspect | Details |
|---|---|
| Sector | Technology |
| Dividend yield | 0.92 % |
| Current dividend per share | 2.12 USD |
| Dividend history | 16 years |
| Last cut or suspension | None |
🗣️ Dividend History
The dividend history of Broadcom Inc. unveils a pattern of steady increases, reflecting management's commitment to shareholder returns. Examining historical dividends is crucial as it portrays the company's ongoing profitability and willingness to reward its investors.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.18 |
| 2024 | 2.17 |
| 2023 | 1.905 |
| 2022 | 1.69 |
| 2021 | 1.49 |
📈 Dividend Growth
Analyzing dividend growth is vital for understanding a company's commitment to increasing shareholder value. Broadcom has demonstrated strong dividend growth over both three and five-year periods.
| Time | Growth |
|---|---|
| 3 years | 13.35 % |
| 5 years | 14.14 % |
The average dividend growth is 14.14% over 5 years. This shows moderate but steady dividend growth, indicating a resilient financial strategy and effective capital management.
✅ Payout Ratio
Payout ratios are pivotal indicators of financial health, showing how much of a company’s earnings are distributed to shareholders as dividends. Broadcom's payout ratios highlight its balanced approach to maintaining and growing dividends.
| Key figure | Ratio |
|---|---|
| EPS-based | 77.34 % |
| Free cash flow-based | 43.98 % |
A payout ratio of 77.34% based on EPS and 43.98% on FCF suggests that Broadcom retains a substantial portion of earnings, allowing for reinvestment and growth opportunities, while still offering attractive dividends to shareholders.
⚠️ Cashflow & Capital Efficiency
Examining cash flows and capital efficiency provides insight into a company's operational health and its ability to sustain or grow dividends.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 2.49 % | 5.05 % | 8.48 % |
| Earnings Yield | 0.76 % | 4.03 % | 5.98 % |
| CAPEX to Operating Cash Flow | 2.31 % | 2.50 % | 2.53 % |
| Stock-based Compensation to Revenue | 11.13 % | 6.06 % | 4.62 % |
| Free Cash Flow / Operating Cash Flow Ratio | 97.25 % | 97.50 % | 97.47 % |
| Return on Invested Capital | 5.57 % | 22.52 % | 19.71 % |
These indicators illustrate Broadcom's robust cash flow management and efficient use of capital. High returns on invested capital alongside stable cash flow yields suggest prudent financial practices conducive to sustainable dividends.
🔍 Balance Sheet & Leverage Analysis
Assessing leverage ratios and balance sheet metrics is essential for evaluating a company's long-term solvency and financial health.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.998 | 1.653 | 1.760 |
| Debt-to-Assets | 40.79 % | 54.42 % | 54.58 % |
| Debt-to-Capital | 49.96 % | 62.30 % | 63.77 % |
| Net Debt to EBITDA | 2.44 | 1.24 | 1.44 |
| Current Ratio | 1.17 | 2.82 | 2.62 |
| Quick Ratio | 1.07 | 2.56 | 2.35 |
| Financial Leverage | 2.45 | 3.04 | 3.23 |
Though moderately leveraged, Broadcom's balance sheet demonstrates resilience with strong liquidity indicated by quick and current ratios, offsetting potential concerns from higher leverage.
💪 Fundamental Strength & Profitability
Profitability metrics are critical for gauging business efficacy and capability to generate profits.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 8.71 % | 58.70 % | 50.62 % |
| Return on Assets | 3.56 % | 19.33 % | 15.69 % |
| Margins: Net | 11.43 % | 39.31 % | 34.62 % |
| EBIT | 26.89 % | 46.68 % | 42.68 % |
| EBITDA | 46.30 % | 57.38 % | 57.69 % |
| Gross | 63.03 % | 68.93 % | 66.55 % |
| Research & Development to Revenue | 18.05 % | 14.67 % | 14.81 % |
Broadcom Inc. displays impressive profitability metrics across the board, underscoring its capability to retain and reinvest earnings efficiently. These metrics imply a well-operated company capable of delivering shareholder value.
📉 Price Development
Dividend Scoring System
| Criteria | Rating | Score |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 4 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 5 | |
| Balance Sheet Quality | 4 |
Total Score: 32/40
🏅 Rating
Broadcom Inc., with its strong dividend history, moderate yet consistent growth, and robust financial metrics, earns a high dividend score. It is recommended as a solid addition to portfolios prioritizing dividend income and capital appreciation, bearing in mind the long-term investment horizon for optimal returns.