10 Most Promising Dividend Stocks According to Hedge Funds

1. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 128

Broadcom Inc. (NASDAQ:AVGO) is an American multinational semiconductor company that offers a wide range of semiconductor and infrastructure software products. In its Q4 2024, the company reported revenue of $14.05 billion, which showed a significant 51% growth from the same period last year. Semiconductor revenue reached an all-time high of $30.1 billion, with AI revenue soaring by 220% compared to the previous year, totaling $12.2 billion. This exceptional growth was driven by the company’s cutting-edge AI XPUs and Ethernet networking solutions. For fiscal year 2024, adjusted EBITDA increased by 37% year-over-year, hitting a record $31.9 billion.

Broadcom Inc. (NASDAQ:AVGO) is drawing considerable attention from investors thanks to its pivotal role in powering products in various sectors, including data centers and smartphones. Its technology supports more than 99% of internet traffic, underscoring its leadership in networking. Furthermore, the company’s acquisition of VMware, a cloud virtualization firm, a year ago has bolstered its market position. VMware’s operating margin has now reached 70%, and the company is on pace to surpass its goal of generating over $8.5 billion in adjusted EBITDA within three years.

Broadcom Inc. (NASDAQ:AVGO) leveraged its robust cash reserves to boost its dividend. In the most recent quarter, the company generated $5.6 billion in operating cash flow and $5.48 billion in free cash flow, accounting for 39% of its total revenue. With 14 consecutive years of dividend growth, Broadcom is considered one of the most promising dividend stocks. The company’s per-share dividend comes in at $0.59 every quarter for a dividend yield of 1.07%, as of January 30.

Overall Broadcom Inc. (NASDAQ:AVGO) ranks first on our list of the most promising dividend stocks. While we acknowledge the potential for AVGO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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