AVGO vs MSFT: Dividend Yield, Growth & Safety Comparison
Broadcom Inc. (AVGO) and Microsoft Corp (MSFT) are both in the Information Technology sector, making them natural rivals for dividend investors. Both stocks offer similar yields — AVGO at 0.71% and MSFT at 0.84%. For dividend growth, AVGO leads with a 5-year CAGR of 12.9% versus MSFT's 10.3%. Both stocks carry a "Safe" dividend safety rating. AVGO is a Dividend Challenger while MSFT is a Dividend Contender.
Key Metrics Comparison
| Metric | AVGO | MSFT |
|---|
| Dividend Yield | 0.71% | 0.84% |
| Annual Dividend | $2.42 | $3.48 |
| 5-Year CAGR | 12.9% | 10.3% |
| Payout Ratio | 49% | 21% |
| Consecutive Years | 6 | 20 |
| Price | $327.48 | $401.99 |
Yield Comparison
Microsoft Corp (MSFT) currently yields 0.84%, which is very low for the broader market. That's 0.13% more than Broadcom Inc. (AVGO), which yields 0.71%. In dollar terms, MSFT pays $3.48/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 MSFT's 10.3%. 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%). MSFT: Dividend growth has been steady, with a 3-year CAGR of 10.4% and a 5-year CAGR of 10.3% (10-year: 9.8%).
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. MSFT's dividend safety is rated "Safe." The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x. MSFT's payout ratio of 21% is more conservative than AVGO's 49%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in MSFT generates approximately $84/year in dividend income, compared to $71/year from AVGO — a difference of $13/year. At $100,000, that gap widens to $130/year.
Verdict
- Best for income: MSFT
- Best for growth: AVGO
- Best for safety: MSFT
Frequently Asked Questions
Which has a higher dividend yield, AVGO or MSFT?
Microsoft Corp (MSFT) has a higher dividend yield of 0.84% compared to Broadcom Inc. (AVGO) at 0.71%.
Is AVGO or MSFT a better dividend growth stock?
Broadcom Inc. has the stronger dividend growth with a 5-year CAGR of 12.9%, compared to Microsoft Corp's 10.3%.
Which is safer for dividend income, AVGO or MSFT?
Broadcom Inc.'s dividend safety is rated "Safe" while Microsoft Corp is rated "Safe." 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 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x.
How much income does $10,000 in AVGO vs MSFT generate?
A $10,000 investment in AVGO generates approximately $71/year in dividends, while the same amount in MSFT generates about $84/year.
Is AVGO or MSFT a Dividend Aristocrat?
Broadcom Inc. is a Dividend Challenger (6 years) and Microsoft Corp is a Dividend Contender (20 years).
Which has a lower payout ratio, AVGO or MSFT?
Microsoft Corp has a lower payout ratio of 21% compared to Broadcom Inc.'s 49%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AVGO vs MSFT: which is better for retirement income?
It depends on your priorities. MSFT for current income, AVGO for dividend growth, MSFT for safety. Many retirement investors hold both for diversification.
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