Top 10 Dividend Stocks To Buy According To Hedge Funds

1. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 161

Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor company that offers a wide range of semiconductor and infrastructure software products. The company has garnered significant investor interest due to its critical role in enabling products across various industries, including data centers and smartphones. The company plays a dominant role in networking, managing over 99% of internet traffic. Its market position was further strengthened by the acquisition of VMware, a cloud virtualization firm, a year ago. Since then, VMware’s operating margin has climbed to 70%, and the company is on track to exceed its target of generating more than $8.5 billion in adjusted EBITDA within three years.

In the fourth quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) reported $14.05 billion in revenue, reflecting an impressive 51% increase from the previous year. Semiconductor revenue reached a record $30.1 billion, while AI-related revenue surged 220% year-over-year to $12.2 billion, driven by strong demand for its advanced AI XPUs and Ethernet networking solutions. For the full fiscal year, adjusted EBITDA rose 37% year-over-year to a record $31.9 billion.

Broadcom Inc. (NASDAQ:AVGO) has consistently increased its dividend payments for 14 consecutive years, supported by its strong cash flow. In the latest quarter, the company generated $5.6 billion in operating cash flow and $5.48 billion in free cash flow, representing 39% of its total revenue. It currently pays a quarterly dividend of $0.59 per share and has a dividend yield of 1.16%, as of February 25.

Overall Broadcom Inc. (NASDAQ:AVGO) ranks first on our list of the best dividend stocks according to hedge funds. 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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