Dividend Stock Portfolio: 8 Stocks To Invest In According to Reddit

1. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 130

Broadcom Inc. (NASDAQ:AVGO) is a California-based multinational semiconductor company that offers a wide range of semiconductor and infrastructure software products. The company has caught the interest of retail investors by offering network and data center solutions, as well as cloud-based tools through its subsidiary, VMware. Although around 60% of its revenue comes from semiconductor solutions, its infrastructure software segment is seeing significant growth. With a strong position at the intersection of AI and semiconductors, the company represents an attractive investment opportunity.

Broadcom Inc. (NASDAQ:AVGO) reported strong results in fiscal Q3 2024. The company generated $13.07 billion in revenues, which showed a significant growth of 47% from the same period last year. The results demonstrated ongoing strength in the company’s AI semiconductor solutions and VMware. Revenue from AI is projected to reach $12 billion for fiscal year 2024, fueled by Ethernet networking and custom accelerators for AI data centers. The transformation of VMware is progressing effectively, with its integration expected to drive adjusted EBITDA margins to 64% of revenue by the end of fiscal year 2024.

In addition to revenues, Broadcom Inc. (NASDAQ:AVGO) also maintained a strong cash position during the quarter. Its operating cash flow came in at $5 billion and its free cash flow amounted to $4.8 billion, which represented 37% of the revenue. During the quarter, it returned $2.4 billion to shareholders in dividends, which makes it one of the best companies for a dividend stock portfolio.

Broadcom Inc. (NASDAQ:AVGO) currently pays a quarterly dividend of $0.53 per share and has a dividend yield of 1.24%, as of September 21. The company has raised its payouts for 13 years in a row. Moreover, its 5-year average annual dividend growth rate comes in at nearly 16%.

The number of hedge funds tracked by Insider Monkey owning stakes in Broadcom Inc. (NASDAQ:AVGO) jumped to 130 in Q2 2024, from 115 in the previous quarter. These stakes have a total value of over $20 billion. Rajiv Jain’s GQG Partners owned the largest stake in the company in Q2.

Overall, Broadcom Inc. (NASDAQ:AVGO) ranks first on our list. While we acknowledge the potential for AVGO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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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Disclosure: None. This article is originally published at Insider Monkey.