Broadcom just delivered something most dividend investors dream about: a double-digit dividend increase that came right alongside stunning business results.

The semiconductor and software company announced a 10.2% dividend hike to $0.65 per share on Dec. 11, the same day it reported record fourth-quarter revenue of $18 billion.

But the bigger question now is whether Broadcom (AVGO) can keep this streak alive. The company’s future dividend growth depends almost entirely on whether the AI spending boom continues or finally cools off.

Broadcom has raised its annual dividend from just $0.19 per share in fiscal 2016 to $2.42 per share in fiscal 2025. That’s a remarkable run.

Let’s see if Broadcom stock can continue to raise dividends in fiscal 2026 and beyond. 

Broadcom is bullish on AI growth.

AVGO stock has a sustainable dividend payout ratio

Getty Images Broadcom’s dividend track record stands out, even in a market where many tech companies have started paying dividends.

AVGO has increased its annual dividend for 15 consecutive years since initiating 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 tech deals ever, Reuters reported.

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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.

CFO 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 repurchase program, with $7.5 billion remaining, through the end of calendar year 2026.

  • Analysts covering AVGO stock forecast it to grow FCF from $26.9 billion in 2025 to $107 billion in 2029. 
  • Comparatively, the annual dividend is projected to expand from $2.42 per share to $4.60 per share. 
  • Given an annual dividend expense of $12.34 billion, the payout ratio is estimated to improve from 46% in 2025 to 20% in 2030. 

Key dividend metrics for Broadcom stock

  • Quarterly dividend: $0.65 per share
  • Annual dividend: $2.60 per share
  • Dividend yield: Approximately 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 returns in fiscal 2025: $17.5 billion

AI to support dividend growth for AVGO stock

The obvious question is whether Broadcom can maintain this pace of dividend increases. The answer depends largely on whether AI spending continues at current levels.

Broadcom’s business model is increasingly concentrated in AI. The company’s $73 billion AI backlog represents nearly half of its total consolidated backlog of $162 billion.

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During the September 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. That’s a sixfold increase from the $20 billion generated in fiscal 2025.
  • This target suggests management believes the AI boom has years to run. But it also highlights how dependent the company has become on this single market segment.

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 AI demand falters, Broadcom’s ability to continue raising dividends at this pace could be at risk. However, the company’s massive backlog provides visibility into at least the next 18 months of revenue.

Broadcom’s AI business has accelerated

Broadcom’s recent dividend increase didn’t happen in a vacuum. It 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 would double year over year in the first quarter to $8.2 billion.

The company has secured massive orders from tech giants building AI infrastructure. Broadcom revealed it now has five customers for its custom AI chips, called XPUs, including a fifth customer that placed a $1 billion order.

Most notably, the company received an $11 billion order from a single customer for delivery in late 2026, in addition to a $10 billion order from the same customer in the previous quarter.

Broadcom’s total AI backlog now exceeds $73 billion, with delivery expected over the next 18 months. The company’s networking products are also seeing unprecedented demand, particularly the Tomahawk 6 switch.

Broadcom’s margin question

One challenge facing Broadcom is margin pressure from its expansion of its AI business. The company is increasingly selling complete systems rather than just chips.

These system sales include components that Broadcom doesn’t manufacture, which get passed through at lower margins. This is similar to how memory chips in the company’s XPUs reduce overall gross margins.

During the December earnings call, Spears acknowledged this dynamic. “Gross margin dollars will go up, margins will go down,” she explained.

AVGO expects operating margins to hold up better than gross margins due to operating leverage. As revenue scales dramatically, the company can spread fixed costs across a much larger revenue base.

In the fourth quarter, Broadcom achieved a record adjusted EBITDA of $12.2 billion, or 68% of revenue. This exceeded the company’s 67% guidance and was up from the prior year.

The bottom line

Broadcom’s 10% dividend increase is impressive, given the company’s already substantial payout. The semiconductor giant has built a remarkable track record of consistent dividend growth.

An ability to maintain this pace in 2026 and beyond depends almost entirely on the AI market.

However, Broadcom’s increasing concentration in AI creates risk. If tech giants slow their infrastructure spending or shift to different suppliers, the company’s growth could stall quickly.

For now, the combination of massive backlog, strong cash flow generation, and management’s aggressive growth targets suggests another year of solid dividend increases is likely.

Related: Broadcom: A high-conviction dividend stock I’d own in 2026