An in-depth analysis of Broadcom Inc's dividend history, yield, and growth rates, and a glance into its future prospects
Broadcom Inc(AVGO, Financial) recently announced a dividend of $4.6 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-20. 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 deep dive into Broadcom Inc's dividend performance and assess its sustainability.
What Does Broadcom Inc Do?
Broadcom 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 iPhone. It counts Apple as a large customer at roughly one fifth of sales. In software, it sells infrastructure and security software to large financial institutions and governments. Broadcom 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 12 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 2.13% and a 12-month forward dividend yield of 2.18%. 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 15.70%. Extended to a five-year horizon, this rate increased to 30.50% per year. And over the past decade, Broadcom Inc's annual dividends per share growth rate stands at an impressive 45.00%. 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 8.06%.
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 2023-07-31, Broadcom Inc's dividend payout ratio is 0.55. 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 2023-07-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of 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 13.30% per year on average, a rate that outperforms than approximately 53.27% 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 60.10% per year on average, a rate that outperforms than approximately 79.4% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 23.80%, which outperforms than approximately 59.35% of global competitors.
Next Steps
Given Broadcom Inc's consistent dividend payments, impressive dividend growth rate, and sustainable payout ratio, coupled with strong profitability and growth metrics, the company's dividends appear to be in a healthy position. As a value investor, it's crucial to keep an eye on these factors while considering Broadcom Inc for your portfolio. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
Also check out: (Free Trial)
