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A Dividend Growth Machine By TipRanks


© Reuters. Broadcom: A Dividend Growth Machine

Broadcom (NASDAQ) is a world technology leader. It designs and develops an extensive range of infrastructure and semiconductor software solutions.

This company is known for its innovation in semiconductor technology. It offers thousands of products in end-products and other industries, including enterprise, data center networking and home connectivity.

This company is seeing tremendous financial results from growing semiconductor demand.

Broadcom’s case for investment is particularly interesting to me because it has a track record of increasing dividends and the potential for future growth. The stock trades for a reasonable valuation while offering a high yield and an attractive yield. The stock is a strong investment. (See Insiders’ Hot Stocks on TipRanks)

Robust Financial Services

Broadcom’s bottom and top lines have grown tremendously over the past several years. Broadcom boasts a compound annual growth rate (CAGR) of 19.4% over five years.

Performance remained very strong in its latest results, as Broadcom generated revenues of $6.8 billion in Q3 2021, which signifies an increase of 16% compared to the prior year’s quarter.

Broadcom’s Infrastructure Software unit saw strong demand, which drove the revenue growth.

The analyst consensus estimate was $6.96. Additionally, revenues are expected to reach $7.35 trillion in Q4, an estimate that is significantly higher than that of analysts consensus. This shows that there is no sign that revenue growth will slow in the immediate future.

Growing Dividends

The company’s strong profitability growth has resulted in increasing dividends for shareholders. Broadcom has a history of 10 consecutive years of annual dividend increases, which have been consistent with EPS growth.

This company saw a 11% increase in DPS, compared to the 22.6% and 51.4% increases.

Broadcom expects to generate EPS of $27.98 in the next year. This implies that Broadcom will pay 51.4% of the annual DPS rate, currently $14.40.

It is probable that the company will increase its December dividends as an after-tax bonus of $3.60.

Broadcom is an excellent choice for dividend-growth investors. Broadcom’s dividend growth is substantial. The stock also yields 2.9% at current levels, which are the $3.60 quarterly DPS rates. This is an excellent yield considering the market conditions.

Wall Street’s Take

Broadcom is rated Strong Buy by Wall Street based on 18 Buys and two Holds. There have been zero Sells in the last three months. At $570.94, the average Broadcom price target implies 18.3% upside potential.

Disclosure: Nikolaos Sismanis didn’t hold any position at the time this article was published.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.