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Broadcom (ticker: AVGO) plans to boost its quarterly dividend by 51%, a piece of good news for investors in a company whose shares have lagged behind the market this year.
Chip makers have been under pressure from concern that slower global economic growth could hurt demand. Semiconductor manufacturing is a highly cyclical industry.
After the close of trading on Thursday, the company's board declared a quarterly disbursement of $2.65 a share, up from $1.75 previously, a level that gave Broadcom a yield of 3.1%.
But factoring in the higher dividend, the yield would be about 4.5%, more than double the 2% average for companies in the S&P 500.
As of Thursday's close, the stock was down about 10% this year, including dividends. It was rallying on Friday morning, having gained more than 3% to $234 and change.
Broadcom said it earned $5.85 a share, compared with $4.59 a year earlier, on sales of nearly $5.5 billion.
A research note by SunTrust Robinson Humphrey said that the company's guidance for its next fiscal year "implies the dividend will expand by another 20% next year, and we continue to believe this company has a double-digit EPS and dividend growth trajectory."
All of that would help ease the pain Broadcom investors have experienced this year. Barron's said in September that Broadcom could be worth buying.
Write to Lawrence C. Strauss at lawrence.strauss@barrons.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
