From an outside perspective, Broadcom Inc (NASDAQ:AVGO), the global semiconductor giant, doesn’t look like a top dividend stock, given its low yearly dividend yield of 1.1%. However, as explained in an article by Michael Byrne, with its stock rising 116% year-to-date and a market cap of $839.1 billion, looks can be deceiving.
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Here are 3 reasons why Broadcom’s stock is a great dividend stock opportunity:
- 1.1% dividend yield is better than it sounds: It doesn’t sound like much, but hidden factors paint this picture in much brighter colors. First, Broadcom consistently pays its shareholders, with 13 consecutive years of yearly dividends. What is more lucrative is its compound annual growth rate (CAGR) of 17.5% over the past five years, enhancing the dividends’ size. Secondly, its low yield is a consequence of the AVGO stock price soaring, not something investors will reject hearing.
- Stock rising is not an anomaly: Since its IPO in 2009, Broadcom’s stock has risen 110-fold! In the past ten years, AVGO has had a total return of 3,168%, including price appreciation and reinvested dividends. During the last five years, AVGO stock has returned 661.6%. It seems, Broadcom is not a one-hit-wonder but more of a greatest-hits factory for years to come.
- Stock split garners momentum: Broadcom has recently announced a 10-for-1 stock split, taking effect on July 12. This will not impact the company’s value, but it does create renewed enthusiasm regarding AVGO stocks. On the day of the announcement, the stock jumped 12% alone. The split will make the stock far more attainable for retail investors, resulting in more activity, driving the stock up, and increasing its dividend value.
Final Conclusion
Broadcom Inc. is known as a semiconductor and software giant, although it has an underrated reputation regarding its yearly dividend returns of 1.1%. As shown, this is a misguided notion that does not do it justice. With 13 consecutive years of annual dividends and impressive yearly growth, a 1.1% yearly dividend has slightly distorted the picture. Its consistency, along with the company’s stock split and the potential for additional growth make Broadcom a remarkable dividend value opportunity for investors.
