Broadcom's Dividend Has Grown About 90-Fold Since 2010. Its Next Raise Usually Comes in December.

When Avago Technologies declared its first dividend in December 2010, it was 7 cents a share. Avago then took the name Broadcom (NASDAQ:AVGO), and after the company's 10-for-1 stock split in 2024, the first payout comes out to under a penny. Now, the quarterly dividend is $0.65 a share -- more than 90 times the first check.

The yield doesn't look like much. At around $350 as I write, shares yield about 0.7% on the $2.60 annual payout.

But investors who buy stocks for growing income usually care about two other things: how fast the dividend climbs and how easily the company covers it.

Broadcom has a solid answer to the first, with 15 straight years of raises. And I think its answer to the second is improving.

The cash behind the dividend has been rising far faster than the dividend itself. That matters because the company chooses how much to raise the payout just once a year, in December.

Image source: Getty Images.

A raise every December

In December 2016, the board doubled the quarterly payout to $1.02 a share (around $0.10 after the split) alongside the company's fiscal fourth-quarter results. Every raise since has come the same way, once a year, in December, with the fourth-quarter report.

Broadcom boosted its quarterly dividend 10% last December. This made fiscal 2026's $2.60 annual payout the company's 15th straight yearly increase.

"Based on increased cash flows in fiscal year 2025, we are increasing our quarterly common stock dividend by 10% to $0.65 per share for fiscal year 2026," said Kirsten Spears, Broadcom's chief financial officer at the time, in the company's December earnings release.

Put simply, the board looks back at the fiscal year that just ended and sets the dividend for the coming year. This December's decision will likely rest on fiscal 2026, which ends Nov. 1.

What pays for the raises?

Showing how fast Broadcom's cash generation is growing, free cash flow climbed 95% year over year to $13.7 billion in the quarter ended Aug. 2, 2026 (Broadcom's fiscal third quarter). That was 46% of revenue. Revenue grew 86% to $29.6 billion, driven by artificial intelligence (AI) semiconductor revenue of $16.7 billion, up 221%. Capital expenditures were just around $0.5 billion, versus $14.2 billion of operating cash flow.

Stepping back, free cash flow rose about 10% for fiscal 2024, then 39% for fiscal 2025, to $26.9 billion. In the first three quarters of fiscal 2026, Broadcom has already brought in around $31.9 billion, which beats all of last year and is up about 64% from the same stretch a year earlier.

Put another way, Broadcom's cash flow growth has sped up two years running. And management expects fourth-quarter revenue of around $34.8 billion, up 93% year over year.

The dividend is taking a smaller share of the cash

The raises haven't kept up, and for a dividend-growth investor, I'd say that's good news. Broadcom's past three hikes were 14%, 11%, and 10%. The raises got a bit smaller even as cash flow growth sped up.

Broadcom paid around $9.8 billion in dividends in fiscal 2024, about half its free cash flow. In fiscal 2025, dividends of around $11.1 billion used 41%. And the $9.3 billion Broadcom has paid so far this fiscal year was around 29% of free cash flow -- and just 23% in the latest quarter.

Of course, the rest of the cash isn't idle. Broadcom has spent $8.5 billion buying back its own shares so far in fiscal 2026. It also repaid $5.6 billion in debt in the fiscal third quarter and retired another $1.5 billion in notes after the quarter ended.

Yes, most of the growth behind these numbers is from AI chip sales to a concentrated group of customers building frontier AI models, and demand from that group might swing.

But the latest two raises were both based on a full year of cash that had already come in. If the pattern holds, a slowdown in cash flow could just mean a smaller raise, not a risk to the payout itself.

At a 0.7% yield, Broadcom stock won't do much for investors who need income today. But the payout has grown over 90-fold since 2010, and it's been taking a smaller share of the company's cash since fiscal 2024. For investors focused on how fast their income grows, I think this matters more than a starting yield under 1%.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom. The Motley Fool has a disclosure policy.