Broadcom Incorporation is a company based in the United States. The company designs, manufactures, and sells semiconductors and software. The company makes products like set-top boxes and other broadband gateways, wireless chips, enterprise cloud storage, and other products. The company was founded in 1961.
Why You Should?
- Broadcom is a great growth play in an investor’s portfolio. The company continues to report double-digit/upper single-digit growth across all of its products as demand has never been higher. If this growth continues, it will benefit the company as they will continue to grow and expand the business. This will also benefit investors.
- Broadcom will continue to benefit from. Biden administration. Biden will look to lower tensions with allies. This will help Broadcom sell more of its products internationally. Furthermore, Biden looks to spend billions of dollars in order to expand the United States presence in the semiconductor space, something that will benefit Broadcom.
- Broadcom supplies its products to many large companies like Apple. Because Apple (and many other companies) rely on Broadcom to supply critical parts for their products, it makes Broadcom a safe investment option because it is unlikely for the company to lose customers. This will help Broadcom continue to grow or maintain stable sales.
- Broadcom offers investors a dividend of around $14.40 (around 3%) annually. A dividend is an amount that a company pays to its investors every quarter. Paying a dividend of over $14 will offer investor’s a great source of income in addition to profits they made off investing in Broadcom. This will also help Broadcom gain new investors.
- Broadcom, as well as other companies in the semiconductor industry, continue to see extremely strong demand for their chips. In fact, Broadcom saw its recent quarterly results beat estimates by a wide margin due to a strong chip business. This will benefit the company’s future growth as it will continue to grow its business.
- The company saw rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company grow and make critical acquisitions to further diversify its business. This has also benefited as the company’s stock price and the dividend have risen over the past couple of years as well. In the financial year of 23.89 billion and profits of around 2.96 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues 22.6 billion and profits of around 2.72 billion.
Why You Should Not?
- Broadcom faces tough competition in the semiconductor industry. Some of these companies include Qualcomm, Skyworks, Intel, and many others. This competition might hurt the company and its investors in the future.
I think that Broadcom is a great long-term investment due to its position as a good growth play, positive impacts from a Biden administration, strong demand for chips, its position as a supplier for large companies, a good dividend, as well as its history of rising revenues and profits. However, tough competition might hurt the company and its investors in the future.