Two Chip Giants, Two Very Different Dividends. Which One Pays You Better?
Texas Instruments and Broadcom both raise their dividends every year, but the gap between their yields and growth trajectories forces a choice that retirement investors rarely think through carefully enough.
For a retirement portfolio built around semiconductor dividends, the choice today comes down to Texas Instruments (NASDAQ:TXN | TXN Price Prediction) versus Broadcom (NASDAQ:AVGO): which chip dividend actually pays you better right now? One stock treats the dividend as the thesis. The other treats it as a byproduct of an AI story so large that the payout is almost incidental. Here is how they stack up on the three things that matter for income holders.
Dividend Today: Yield, Coverage, and Growth Streak
Texas Instruments just raised its quarterly cash dividend from $1.42 to $1.52 per share, taking the annualized forward payout to $6.08. Against a current price of $269.16, Alpha Vantage pegs the trailing yield at 2.07%. Broadcom’s quarterly dividend sits at $0.65 per share, or $2.60 annualized, a trailing yield of just 0.72% on a $360.29 share price.
Both are well covered. TXN generated $6.53 billion in trailing free cash flow and paid $1.3 billion in dividends last quarter. Broadcom produced a record $13.7 billion of free cash flow in Q3 alone against $3.1 billion in dividend payments. On streak: TXN’s payout ladder climbs cleanly from $0.50 in 2017 to $1.52 in 2026, backed by a 20+ year dividend growth history. AVGO’s is the 15th consecutive annual increase since fiscal 2011.
Winner: TXN. Nearly three times the current yield with a longer, deeper track record.
What Funds the Payout, and How Cyclical Is It
TXN’s cash comes from analog and embedded chips sold into industrial, automotive, and data center. The recovery is real: industrial rose roughly 30% year on year, data center doubled, and CEO Haviv Ilan said “I think we are in the start of a cycle that is very, very broad.” But this stream is textbook cyclical, and TXN is still spending. Capex ran $3.3 billion over the last 12 months, with a full-year 2026 range of $2 to $3 billion. That wafer-fab program competes directly with the dividend for cash.
Broadcom’s engine is different. Q3 AI semiconductor revenue hit $16.7 billion, up 221% year on year, and management guided Q4 AI revenue to $21.7 billion, up 236%. Infrastructure software, mostly VMware, contributed $8.8 billion at a 94% gross margin. Hock Tan said “Q3 demand was simply hot and we’re just getting started.” Capex was a modest $532 million. The risks are concentration (Broadcom flagged six XPU customers) and $88.46 billion in total liabilities from VMware, though the company retired $5.6 billion of long-term debt in Q3.
Winner: AVGO. Faster-growing cash generation, lighter capex burden, and a software layer smoothing the semiconductor cycle.
How the Tradeoffs Stack Up for Retirement Income
The tradeoff is the classic yield-versus-growth call. TXN pays you 2.07% today with high-single-digit dividend hikes and a heavy capex overhang. AVGO pays you 0.72% today but is raising the payout off a torrent of AI cash flow, with management “very much on target to exceed $30 in earnings per share in fiscal 2028.” Valuation actually favors Broadcom on a forward basis: 19x forward earnings versus 27x for TXN. And the ten-year total-return record is not close: AVGO up 2,678% against TXN’s 413%.
Verdict: The two names offer sharply different profiles for retirement income. Broadcom pairs a lower starting yield with a payout compounding faster off cash flow growing at triple-digit rates, alongside a cheaper forward multiple, though it carries an AI-cycle drawdown risk and an 1.46 beta plus hyperscaler concentration. Texas Instruments offers a higher current cash coupon and a longer dividend-growth history, better suited to a conservative income profile. What would shift the tradeoff: any material slippage in Broadcom’s fiscal 2027 $115 billion AI semiconductor target, or evidence that a top-two XPU customer is pulling orders.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
