Broadcom just delivered something most dividend investors dream of: a double-digit dividend increase that came along with impressive business results.
The semiconductor and software company announced a 10.2% dividend increase to $0.65 per share on Dec. 11, the same day it reported record fourth-quarter revenue of $18 billion.
But the biggest question now is whether Broadcom can keep this streak alive. the company future dividend growth depends almost entirely on whether the AI ​​spending boom continues or eventually cools.
Broadcom has raised its Annual dividend from just $0.19 per share in prosecutor 2016 to $2.42 per share in prosecutor 2025. That’s a remarkable career.
Let’s see if Broadcom stock can continue to grow dividends in fiscal 2026 and beyond.
Broadcom is optimistic about the growth of AI.Getty Images ·fake images
Broadcom’s dividend history stands out, even in a market where many technology companies have started paying dividends.
AVGO has increased its annual dividend for 15 consecutive years since it began dividends in fiscal 2011. This latest 10% increase marks the continuation of that streak.
What’s impressive is that Broadcom maintained this dividend growth even while making massive acquisitions. It completed its $69 billion purchase of VMware in late 2023, one of the largest technology deals in history, Reuters reported.
Related: Amazon rival pays 5.6% dividend despite retail slump
In fiscal 2025, Broadcom returned $17.5 billion to shareholders through $11.1 billion in dividends and $6.4 billion in share buybacks. The company generated $26.9 billion in free cash flow, up 39% year over year.
Chief Financial Officer Kirsten Spears emphasized the company’s commitment during the earnings call, noting that the new quarterly dividend of $0.65 per share implies an annual dividend of $2.60 per share, indicating a yield of less than 1%.
The board also approved an extension of the company’s share buyback program, with $7.5 billion remaining, through the end of calendar year 2026.
Analysts covering AVGO stock predict that grow FCF from $26.9 billion in 2025 to $107 billion in 2029.
Comparatively, the annual dividend is projected to increase from $2.42 per share to $4.60 per share.
given a annual dividend expense of $12.34 billionThe payment rate is estimated to improve from 46% in 2025 to 20% in 2030.
Quarterly dividend: $0.65 per share
Annual dividend: $2.60 per share
Dividend yield: About 0.8% (based on recent stock price)
Payout ratio: Approximately 46% based on fiscal 2025 free cash flow
Consecutive years of dividend increases: 15 years
Total shareholder return in fiscal 2025: 17.5 billion dollars
The obvious question is whether Broadcom will be able to maintain this pace of dividend increases. The answer largely depends on whether AI spending continues at current levels.
Broadcom’s business model is increasingly focused on AI. The company’s $73 billion AI backlog represents nearly half of its total. consolidated order book of 162 billion dollars.
During September’s Goldman Sachs technology conference, CEO Hock Tan shared an interesting detail.
His compensation package includes incentives tied to hitting. $120 billion in AI revenue by 2030. This is a six-fold increase from the $20 billion generated in fiscal year 2025.
This goal suggests that management believes the AI ​​boom is still years away. But it also highlights how dependent the company has become on this one segment of the market.
Broadcom’s non-AI semiconductor business was flat year-over-year in the fourth quarter. The infrastructure software segment, which includes VMware, grew 19% but at a much slower pace than AI.
If demand for AI falters, Broadcom’s ability to continue growing dividends at this pace could be at risk. However, the company The huge backlog provides visibility into at least the next 18 months of revenue..
Broadcom’s recent dividend increase didn’t come in a vacuum. This followed explosive growth in the company’s artificial intelligence (AI) business.
In fiscal 2025, Broadcom’s AI revenue grew 65% year over year to $20 billion. Tan expects this growth to accelerate dramatically in 2026.
During the company’s December earnings call, he stated that AI revenue doubled year-over-year in the first quarter to $8.2 billion.
The company has landed massive orders from tech giants building AI infrastructure. Broadcom revealed that it now has five customers for its custom AI chips, called XPUs, including a fifth customer that placed a $1 billion order.
In particular, the company received a $11 billion order from a single client for delivery by the end of 2026, in addition to a $10 billion order from the same customer in the previous quarter.
Broadcom’s total AI portfolio now exceeds $73 billionand is expected to be delivered in the next 18 months. The company’s networking products are also seeing unprecedented demand, particularly the Tomahawk 6 switch.
One challenge Broadcom faces is pressure on margins due to the expansion of its artificial intelligence business. The company is increasingly selling complete systems rather than just chips.
These system sales include components that Broadcom does not manufacture, which carry over at lower margins. This is similar to how the company’s XPU memory chips reduce overall gross margins.
During the December earnings conference call, Spears acknowledged this dynamic. “Gross margin dollars will go up, margins will go down,” he explained.
AVGO wait Operating margins will hold up better than gross margins. due to operating leverage. As revenue increases dramatically, the company can spread fixed costs over a much larger revenue base.
In the fourth quarter, Broadcom achieved record adjusted EBITDA of 12.2 billion dollarsor 68% of income. This exceeded the company’s 67% guidance and was higher than the previous year.
The 10% increase in Broadcom’s dividend is impressive, given the company’s already substantial payout. The semiconductor giant has built a remarkable track record of consistent dividend growth.
The ability to maintain this pace in 2026 and beyond depends almost entirely on the AI ​​market.
However, Broadcom’s increasing focus on AI poses risks. If tech giants reduce their infrastructure spending or switch to different providers, company growth could quickly grind to a halt.
For now, the combination of a huge order book, strong cash flow generation, and management’s aggressive growth targets suggest another year of solid dividend increases is likely.
Related: Broadcom: A High-Conviction Dividend Stock You Would Own in 2026
This story was originally published by TheStreet on February 15, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
