Chip maker Broadcom has just posted strong results for the fourth quarter, prompting a wave of bullish sentiment from the Street. Management also raised the dividend by 51 percent.
Shareholders now receive a quarterly payout of $2.65 (up from $1.75 previously), adding up to a whopping $10.60 on an annual basis. As a result, AVGO shareholders now enjoy an impressive 4.25 percent yield, versus the tech average of just 1.12 percent.
“AVGO provides an attractive opportunity given a dominant market share, ~$6B in buybacks remaining, $8B+ of FCF, and a ~3%+ dividend yield” cheered Mizuho Securities analyst Vijay Rakesh (Track Record & Ratings) in a December 14 report.
What’s more, the five-star analyst also singled out AVGO as the semiconductor stock that “would most likely provide long-term value for clients.” This was with a buy rating and $295 price target (18 percent upside potential).
“Trading at the low-end of historical valuations, we believe AVGO is undervalued as it is well-positioned with a diversified revenue stream” explains Rakesh. He cites the acquisition of CA as providing further shelter from Apple fears and China slowdown while driving earnings, margins, and FCF leverage.
Rakesh isn’t the only top analyst singing the stock’s praises. AVGO earns a ‘strong buy’ Street consensus, with a $291 average price target (16 percent upside potential).