3 Elite Dividend Stocks Hiding in the Nasdaq-100

Investors buy the Nasdaq-100 for growth, and most of its weight sits in companies that return little or nothing to shareholders. Tucked inside that growth engine is a real income segment, and its payouts rest on some of the deepest cash generation in the market. In its latest fiscal year, Microsoft (NASDAQ:MSFT | MSFT Price Prediction) alone produced $66.99 billion of free cash flow. Microsoft, Broadcom (NASDAQ:AVGO), and Costco (NASDAQ:COST) all appear in the most recent reported holdings of the flagship Nasdaq-100 tracker, and all three pay a regular quarterly dividend. The trade-off is explicit: every yield here is modest, so you are buying strength and dividend growth potential while accepting a small current check.

Microsoft: A Fresh Raise Funded by a Cash Machine

Microsoft yields about 0.69% at a share price of $516.17, so the current income is small. What just changed is the payout itself: the board declared a quarterly dividend of $0.98 per share, up from $0.91, payable December 10 to shareholders of record on November 19. That lifts the annualized forward dividend to $3.92 per share.

Dividend safety: Coverage is very wide. Microsoft paid $3.64 per share in dividends over the trailing 12 months against diluted earnings of $17.97 per share. For the full fiscal year, operating cash flow reached $182.94 billion, and even after $115.95 billion of capital spending, free cash flow came in at $66.99 billion. That strength is reflected in debt-to-equity of 0.291, net debt to EBITDA of 0.557, and interest coverage of 50.88x.

Track record: The dividend record shows quarterly payments going back to 2003. In the recent history, the quarterly payout has stepped up every year, from $0.51 in 2020 to $0.56, $0.62, $0.68, $0.75, $0.83, $0.91, and now $0.98. Further back, the quarterly check was just $0.13 during 2009 and 2010.

Bull case: The cash engine is still accelerating. Full-year revenue rose 17.79% to $331.84 billion, and net income climbed 31.34% to $133.75 billion. Azure crossed $100 billion in annual revenue, Microsoft 365 Copilot passed 30 million paid seats, and commercial remaining performance obligations reached $678 billion, up 84%. That backlog is signed future cash that can fund future increases. The stock trades at about 29 times trailing earnings and 25 times forward earnings.

Risk: The AI build-out is eating into free cash flow. Fourth-quarter capital spending jumped 109.6% to $35.80 billion, and quarterly free cash flow fell 23.2% to $19.64 billion. Full-year free cash flow slipped 6.46%. If capital spending keeps exceeding operating cash flow, future dividend increases could moderate even with the payout itself well covered.

Broadcom: AI Cash Flow Gives the Payout Deep Cover

Broadcom yields 0.73% at $352.81 per share. Its quarterly dividend of $0.65 goes out September 30 to holders of record on September 21, which puts the annualized forward dividend at $2.60.

Dividend safety: Broadcom’s cash generation has surged. In its fiscal third quarter, operating cash flow rose 98% to $14.20 billion, capital spending was just $532 million, and free cash flow jumped 94.55% to $13.67 billion, equal to 46% of revenue. The company held $23.98 billion in cash. On an earnings basis, the annual dividend compares with trailing diluted EPS of $7.74. Broadcom also had enough left over to buy back $600 million of stock in its fiscal second quarter.

Track record: The dividend record shows quarterly payments dating to 2010. The two most recent increases lifted the quarterly check from $0.53 to $0.59 and then from $0.59 to $0.65, and both arrived with the December payment. The payout has held at $0.65 for the last four payments, which makes the year-end declaration the next one to watch.

Bull case: The AI ramp gives Broadcom unusual visibility. Fiscal third-quarter revenue rose 85.5% to $29.59 billion, with AI semiconductor revenue of $16.7 billion, up 221%. Management guided fourth-quarter revenue to about $34.8 billion and AI semiconductor revenue to $21.7 billion. The earnings ramp shows up in the multiple: the stock trades at 45 times trailing earnings but 19 times forward earnings. Analysts are heavily positive, with 8 strong buy and 37 buy ratings against 4 holds, and a consensus target of $531.85.

Risk: A large share of that AI revenue comes from a small number of hyperscale customers. If their order patterns return to normal, the cash flow surge could cool and dividend growth could slow with it.

Costco: Reliable Raises With Occasional Special Payouts

Costco yields 0.59% at $922.77 per share, the smallest yield in this group. The regular quarterly dividend stands at $1.47, up from $1.30, for an annualized forward rate of $5.88. Trailing 12-month payments amounted $5.54.

Dividend safety: Costco just closed its fiscal year with operating cash flow of $15.83 billion, up 18.67%, and free cash flow of $9.39 billion, up 19.82%, after $6.44 billion of capital spending. Cash stood at $20.21 billion. The foundation is membership: fee income reached $1.85 billion in the fourth quarter, the company counts 150.4 million cardholders, and the worldwide renewal rate was 89.8%. Executive members account for 75.6% of sales. That recurring fee stream is what makes the payout so reliable.

Track record: The dividend record shows the regular quarterly payout rising every year from $0.10 in 2005 through the current $1.47. Recent steps went from $0.90 to $1.02, then to $1.16, $1.30, and $1.47. Costco has also paid special dividends of $15 (ex-dividend in December 2023), $10 in 2020, $7 in 2017, $5 in 2015, and $7 in 2012.

Bull case: The business keeps growing. Fourth-quarter revenue rose 11.1% to $95.72 billion, comparable sales grew 9.4% (6.7% excluding gas and currency), and digitally enabled comps climbed 19.5%. GAAP diluted EPS of $6.75 exceeded expectations, a figure that includes a $0.15 per share one-time duty refund benefit. Costco plans about 28 net new warehouses in the coming fiscal year, adding more membership fee income to support future increases. Shares are down 1.61% over the past year even as free cash flow grew at a double-digit pace.

Risk: The base yield is small, so a significant part of Costco’s income appeal rides on special dividends, and their timing is unpredictable. The practical approach is to plan around the regular quarterly check and treat any special as a bonus.

How the Three Payouts Stack Up

Why This Income Cohort Deserves a Closer Look

Microsoft, Broadcom, and Costco pay small yields today, and each backs its dividend with billions in free cash flow, deep cash balances, and a record of lifting the payout. Microsoft brings the most consistent annual raise pattern, Broadcom the fastest-growing cash engine, and Costco a steadily rising regular check exceeded by periodic specials. For income investors who want their Nasdaq-100 exposure to pay them while they wait, this is the segment that fits.

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