Dear stockbrokers, dear stockbrokers,
Due to supply shortages and myriad other issues, semiconductor stocks have had a tough time in 2022.
However, many of the companies are still generating strong cash flows, which should continue for the foreseeable future.
Broadcom (Nasdaq: AVGO) provides semiconductors, fiber optics and software for a variety of industries. The San Jose, California-based company pays a dividend yield of 3.2%. But given the industry’s recent troubles, can Broadcom shareholders have confidence in the dividend?
Broadcom’s free cash flow growth is impressive, and it’s expected to continue, as free cash flow is expected to grow 26% this year and another 7% next year.
Meanwhile, the tech giant is expected to pay out just $6.6 billion in dividends this year and $7.5 billion next year, making it a very comfortable payout ratio of just 39% and 41%, respectively.
Broadcom currently pays a quarterly dividend of $4.10 per share, which translates to a 3.2% yield. The company has raised its dividend every year since 2011.
Given that Broadcom is growing its free cash flow, has a low payout ratio, and has an admirable track record of increasing dividends, the dividend is pretty safe.
Dividend Security Rating: A
Happy investing!
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