Broadcom

Methodology

Broadcom's diversified semiconductor and infrastructure software portfolio creates complex earnings dynamics from cyclical chips combined with recurring software revenue. The company's aggressive acquisition strategy and focus on cash generation rather than growth for growth's sake make earnings more stable than pure-play chip companies. This calculation works reasonably for Broadcom's current business mix, though integration of large software acquisitions like VMware creates near-term complexity.

Methodology

Broadcom's PEG ratio typically ranges from 1.5-2.5, reflecting moderate valuations for a semiconductor company with substantial software revenue and strong cash generation. The company's focus on profitable, cash-flowing assets rather than speculative growth justifies lower multiples than cutting-edge chip designers but higher than cyclical commodity semiconductors. Compare to both diversified semiconductors and infrastructure software to assess Broadcom's unique hybrid positioning.

Methodology

Broadcom's substantial dividend yield (typically 2.0-3.0%) is a key part of management's capital return strategy alongside consistent increases. The company prioritizes returning cash to shareholders through both dividends and debt paydown following acquisitions. PEGY is particularly relevant for Broadcom investors, as the high and growing dividend combined with steady earnings growth creates an attractive total return profile for a large-cap tech company.