AVGO vs MSFT: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
MSFT yields 0.13% more than AVGO. In dollar terms, AVGO pays $2.42/share vs MSFT's $3.48/share annually.
Dividend Growth
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: The payout ratio of 49% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.0x.
MSFT: The payout ratio of 21% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 4.6x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in AVGO vs MSFT today?
At $327.48 per share, $10,000 buys about 30.5 shares of Broadcom Inc. (AVGO). Each share pays $2.42 per year in dividends, so the position starts out generating roughly $74 per year — about $6 a month.
At $401.99 per share, $10,000 buys about 24.9 shares of Microsoft Corp (MSFT). Each share pays $3.48 per year in dividends, so the position starts out generating roughly $87 per year — about $7 a month.
MSFT is the larger income stream from day one: $13 per year more on the same $10,000 invested.
What could $10,000 of AVGO or MSFT income look like in 10 years?
Broadcom Inc. (AVGO) has raised its dividend about 12.9% a year over the past five years. If that pace held, the $71 per year that $10,000 generates today at the current 0.71% yield would reach $239 per year by 2036 — a 2.4% yield on the original cost.
Microsoft Corp (MSFT) has raised its dividend about 10.3% a year over the past five years. If that pace held, the $84 per year that $10,000 generates today at the current 0.84% yield would reach $224 per year by 2036 — a 2.2% yield on the original cost.
On those trailing rates, AVGO pays more in 2036: $239 versus $224 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would AVGO's dividend growth overtake MSFT's higher yield?
Broadcom Inc. (AVGO) yields less today (0.71% vs 0.84%) but has grown its dividend faster — 12.9% vs 10.3% a year over the past five years. If both trends continued, a $10,000 position in AVGO would start out-earning the same position in MSFT around 2034 (roughly 8 years from now), paying about $187 per year at the crossover. Before that point, MSFT pays more each year; after it, the gap compounds in AVGO's favor.
Can AVGO and MSFT afford their dividends?
Broadcom Inc. (AVGO) earns $4.78 per share against $2.42 paid out in dividends — 2.0x coverage (a 49% payout ratio).
Microsoft Corp (MSFT) earns $15.96 per share against $3.48 paid out in dividends — 4.6x coverage (a 21% payout ratio).
MSFT's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for AVGO if earnings weaken.
Which fits an early-retirement income portfolio better, AVGO or MSFT?
For income you need right now, Microsoft Corp (MSFT) leads: $100,000 invested today pays about $70 a month at the current 0.84% yield, versus $59 a month from Broadcom Inc. (AVGO) at 0.71%.
With a decade or more before the income is needed, AVGO's faster dividend growth (12.9% vs 10.3% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: AVGO has raised its dividend 6 consecutive years; MSFT has raised its dividend 20 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $256/yr in AVGO vs $243/yr in MSFT by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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