Citi Identifies Broadcom as a Reliable Stock for Strong Upcoming Profits

Broadcom Inc. (NASDAQ:AVGO) is one of Best Dividend Stocks to Buy for Dependable Dividend Growth.

The stock was recently added to Citi’s updated “Positive ROE Trend” stock basket, an index of companies expected to see rising return on equity (ROE), largely fueled by improved margins or enhanced efficiency, as measured by total asset turnover, according to strategist Scott Chronert.

Citi Research noted that high-quality companies generating strong returns are becoming increasingly difficult to find. Chronert explained in a client note that ROE, which is a measure of profitability calculated by dividing net income by shareholders’ equity, is “increasingly scarce” among large-cap stocks.

Still, Citi believes Broadcom Inc. (NASDAQ:AVGO) stands out as a reliable profit generator. The company is projected to achieve an ROE of over 43% by the end of 2026, marking a sharp increase from current levels. The stock has jumped approximately 51% this quarter and is up by over 7% year to date.

Broadcom Inc. (NASDAQ:AVGO)’s CEO recently stated that the firm expects its AI-related revenue growth in fiscal 2025 to “sustain into fiscal 2026,” driven by continued strong demand for its custom AI chips and networking products.

Broadcom Inc. (NASDAQ:AVGO)’s dividend policy is also very strong, as the company has been rewarding shareholders with growing dividends for the past 14 years. It pays a quarterly dividend of $0.59 per share for a dividend yield of 0.95%, as of June 17.

Broadcom Inc. (NASDAQ:AVGO) is a global tech firm that designs, develops, and delivers a broad portfolio of semiconductor and infrastructure software products.

While we acknowledge the potential of AVGO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure. None.