As American semiconductor designer Broadcom (NASDAQ: AVGO) revels from an impressive quarterly earnings report, the company’s shareholders have more rewards on the way from the expected dividend payout.
The company, which has a 15-year track record of increasing dividends, is set to issue a $0.59 per share payout that will be distributed on December 31, 2024. Shareholders on record as of December 23 will be the beneficiaries of this payout.
Notably, income-chasing investors might find the AVGO stock appealing, considering Broadcom has steadily grown its dividends. The most recent payout was $0.530 in September 2024, followed by $0.525 in June 2024. To this end, Broadcom’s upcoming dividend represents a 13% increase from the previous figure.
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At the same time, the San Jose-based technology firm has a current payout ratio of 37.48%. Interestingly, the company’s consistency places it above the sector’s average yield of 1.37%.
Broadcom’s strong earnings report
Meanwhile, Broadcom is the current star of the semiconductor sector after reporting better-than-expected quarterly results driven by impressive returns from artificial intelligence (AI) alongside a solid three-year estimate.
Broadcom reported adjusted earnings per share of $1.42, exceeding the expected $1.38. Revenue for the quarter was $14.05 billion, slightly below the expected $14.09 billion but up 51% from the previous year.
Net income reached $4.32 billion, or 90 cents per share, a 23% increase from $3.52 billion, or 83 cents per share, in the same quarter last year.
Most importantly, the semiconductor solutions group, which includes artificial intelligence, recorded a 12% revenue increase to $8.23 billion. Broadcom also reported a 220% surge in AI revenue for the year, reaching $12.2 billion, driven by growing demand for generative AI infrastructure and Ethernet networking parts connecting AI chips.
The firm expects first-quarter revenue of approximately $14.6 billion, just above the $14.57 billion analyst estimate.
What next for AVGO stock
Overall, the strong earnings elevated the company to a market capitalization of over $1 trillion, with the stock reaching a new record high.
At the end of the December 13 trading session, AVGO was valued at $224.80, surging almost 25% for the day. In pre-market on December 16, Broadcom was up over 1%, trading at $227. Year to date, the equity is up 107%.
With input from the impressive earnings report, Wall Street analysts also discussed what to expect from AVGO stock moving forward.
For instance, Piper Sandler raised Broadcom’s price target to $250 from $200 with an ‘Overweight’ rating, noting that the company’s AI strength is growing at a “rapid pace.”
On December 13, UBS analyst Timothy Arcuri maintained a ‘Buy’ rating and set the AVGO share price target of $220, up from $200, foreseeing more growth opportunities in AI.
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