AVGO vs IBM: Dividend Yield, Growth & Safety Comparison
Broadcom Inc. (AVGO) and International Business Machines Corp (IBM) are both in the Information Technology sector, making them natural rivals for dividend investors. IBM offers a significantly higher 2.30% yield compared to AVGO's 0.71%, a gap of 1.59%. For dividend growth, AVGO leads with a 5-year CAGR of 12.9% versus IBM's 8.9%. AVGO holds the edge in dividend safety with a "Safe" rating. AVGO is a Dividend Challenger while IBM is a Dividend Aristocrat.
Key Metrics Comparison
| Metric | AVGO | IBM |
|---|
| Dividend Yield | 0.71% | 2.30% |
| Annual Dividend | $2.42 | $6.71 |
| 5-Year CAGR | 12.9% | 8.9% |
| Payout Ratio | 49% | 60% |
| Consecutive Years | 6 | 30 |
| Price | $327.48 | $263.04 |
Yield Comparison
International Business Machines Corp (IBM) currently yields 2.30%, which is solid for the broader market. That's 1.59% more than Broadcom Inc. (AVGO), which yields 0.71%. In dollar terms, IBM pays $6.71/share annually versus AVGO's $2.42/share.
Dividend Growth
Over the past five years, AVGO has grown its dividend at a 12.9% CAGR compared to IBM's 8.9%. AVGO: Dividend growth has been steady, with a 3-year CAGR of 12.7% and a 5-year CAGR of 12.9% (10-year: 28.6%). IBM: Dividend growth is accelerating — the 3-year CAGR of 16.1% exceeds the 5-year rate of 8.9% and the 10-year rate of 5.9%.
Dividend Safety
AVGO's dividend safety is rated "Safe." The payout ratio of 49% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.0x. IBM's dividend safety is rated "Moderate." The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. AVGO's payout ratio of 49% is more conservative than IBM's 60%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in IBM generates approximately $230/year in dividend income, compared to $71/year from AVGO — a difference of $159/year. At $100,000, that gap widens to $1590/year.
Verdict
- Best for income: IBM
- Best for growth: AVGO
- Best for safety: AVGO
Frequently Asked Questions
Which has a higher dividend yield, AVGO or IBM?
International Business Machines Corp (IBM) has a higher dividend yield of 2.30% compared to Broadcom Inc. (AVGO) at 0.71%.
Is AVGO or IBM a better dividend growth stock?
Broadcom Inc. has the stronger dividend growth with a 5-year CAGR of 12.9%, compared to International Business Machines Corp's 8.9%.
Which is safer for dividend income, AVGO or IBM?
Broadcom Inc.'s dividend safety is rated "Safe" while International Business Machines Corp is rated "Moderate." The payout ratio of 49% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.0x. The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x.
How much income does $10,000 in AVGO vs IBM generate?
A $10,000 investment in AVGO generates approximately $71/year in dividends, while the same amount in IBM generates about $230/year.
Is AVGO or IBM a Dividend Aristocrat?
Broadcom Inc. is a Dividend Challenger (6 years) and International Business Machines Corp is a Dividend Aristocrat (30 years).
Which has a lower payout ratio, AVGO or IBM?
Broadcom Inc. has a lower payout ratio of 49% compared to International Business Machines Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AVGO vs IBM: which is better for retirement income?
It depends on your priorities. IBM for current income, AVGO for dividend growth, AVGO for safety. Many retirement investors hold both for diversification.
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