Key Takeaways
- Broadcom posted record free cash flow of $13.7 billion, 46% of revenue, in its fiscal third quarter, CFO Amie O’Toole said, while AI semiconductor revenue grew 221% year on year to $16.7 billion.
- The quarterly dividend held at $0.65 a share, unchanged from the prior quarter.
- Its payout ratio fell to 23.71% this quarter as the yield sank to 0.84%, both far below their two-year averages.
- TIKR’s mid-case model puts Broadcom stock’s target price at $1,134 a share, a 229% total return that annualizes to 33% a year.
Broadcom’s Free Cash Flow Hits a Record $13.7 Billion While Its Dividend Barely Grows
Broadcom (AVGO) closed its fiscal third quarter of 2026 with numbers that dwarf its dividend commentary. Consolidated revenue hit a record $29.6 billion, up 86% year on year, and AI semiconductor revenue alone grew 221% year on year to $16.7 billion.
Operating income reached a record $20.1 billion, up 92% from a year earlier, with operating margin climbing to 67.9%. Free cash flow hit a record $13.7 billion, representing 46% of revenue, CFO Amie O’Toole told analysts.
Inside that capital allocation update, O’Toole said Broadcom paid stockholders $3.1 billion in cash dividends during the quarter, based on a quarterly dividend of $0.65 per share. The company also paid down $5.6 billion of long-term debt in the quarter and, after quarter end, retired another $1.5 billion of senior notes.
Cash on the balance sheet climbed to $24 billion, up $4.3 billion sequentially from $19.6 billion, even as Broadcom committed fresh capital to financing AI infrastructure for its largest customers.
Hock Tan guided fiscal 2026 AI revenue to $58 billion and said that figure is on track to double again to about $115 billion in fiscal 2027, then double again to $230 billion in fiscal 2028. “We are very much on target to exceed $30 in earnings per share in fiscal 2028,” Tan told analysts in Q3 2026 earnings call, tying the AI ramp directly to future earnings power.
None of that AI buildout changed the dividend this quarter. The payment stayed level with the prior quarter even as free cash flow set a new record, leaving distinctly more cash sitting behind each dollar Broadcom pays out.
Broadcom Stock’s Payout Ratio Swings Sharply While Its Yield Keeps Falling
AVGO stock’s quarterly dividend now stands at $0.65 a share, unchanged for four straight quarters after moving up from $0.59, where it also held for four quarters before that. That step-then-hold shape reads as an annual dividend review rather than a quarterly one.
Broadcom’s payout ratio has swung hard over the past two years, from a high of 67.29% down to a 32.84% low, up to 41.99%, and down again to 23.71% most recently. A payout ratio moving that much from quarter to quarter says more about earnings volatility than about dividend policy, since the per-share payment itself barely moved.
The NTM dividend yield sits at 0.84%, close to its 0.56% two-year low and far under its 2.40% high and 1.20% two-year average. At under 1%, the yield is too thin to be the reason anyone buys Broadcom stock, leaving the case resting on price appreciation and the dividend’s growth path rather than current income.
Does the payout ratio settle nearer its 23.71% floor or its 67.29% ceiling as AI-driven revenue mix keeps moving gross margin around?
TIKR’s $1,134 Target Puts Broadcom Stock’s Upside at 229% by 2030
TIKR’s mid-case model puts a $1,134 target price on Broadcom stock by 2030, a 229% total return from today’s $345 that annualizes to 33% a year.
A 33% annualized rate places Broadcom stock among TIKR’s highest-conviction growth names, a return profile built almost entirely on price appreciation rather than income.
The case for reaching $1,134 rests on the AI buildout management detailed on the call: fiscal 2026 AI revenue guided to $58 billion, doubling to $115 billion in fiscal 2027 and $230 billion in fiscal 2028, alongside a record $13.7 billion of quarterly free cash flow.
TIKR sees 229% upside in Broadcom stock by 2030. Check the full model yourself on TIKR for free →
Should You Invest in Broadcom Inc.?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
