Yahoo Finance Interested In Broadcom Inc (NASDAQ:AVGO)’s Upcoming US$1.75 Dividend? You Have 4 Days Left
On the 28 September 2018, Broadcom Inc (NASDAQ:AVGO) will be paying shareholders an upcoming dividend amount of US$1.75 per share. However, investors must have bought the company’s stock before 18 September 2018 in order to qualify for the payment. That means you have only 4 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Broadcom can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
View our latest analysis for Broadcom
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is it paying an annual yield above 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does Broadcom pass our checks?
Broadcom has a trailing twelve-month payout ratio of 25.0%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 45.5%, leading to a dividend yield of around 3.6%. However, EPS is forecasted to fall to $16.58 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Broadcom as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Broadcom has a yield of 3.0%, which is high for Semiconductor stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Broadcom from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for AVGO’s future growth? Take a look at our free research report of analyst consensus for AVGO’s outlook.
Valuation: What is AVGO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AVGO is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
