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3 Artificial Intelligence (AI) Stocks to Buy for Dividends: TSM, MU, AVGO

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Investors love dividends, as they provide a passive income stream and help cushion the impact of drawdowns in other positions.

And interestingly enough, several chip stocks with AI exposure – Taiwan Semiconductor (TSM - Free Report) , Broadcom (AVGO - Free Report) , and Micron (MU - Free Report) – provide quarterly payouts.

Let’s take a closer look at each for those seeking passive income paired with exposure to the artificial intelligence (AI) frenzy.

Micron Forecasts Record Shattering Sales

Micron’s industry-leading technologies enable the latest generation of faster, more intelligent global infrastructures that make AI model training, machine learning training, and generative AI solutions possible.

The stock sports a favorable Zacks Rank #2 (Buy), with earnings expectations moving bullishly across the board.

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Image Source: Zacks Investment Research

The company delivered a notably positive statement within its latest quarterly release, stating, ‘As we look ahead to 2025, demand for AI PCs and AI smartphones, and continued growth of AI in the data center, create a favorable set up that gives us confidence that we can deliver a substantial revenue record in FY25, with significantly improved profitability underpinned by our ongoing portfolio shift to higher margin products.’

The growth picture here remains remarkable, with consensus expectations for its current fiscal year suggesting 125% EPS growth on 60% higher sales. Peeking ahead to FY25, current expectations reflect an additional 700% pop in EPS on 55% higher revenues.

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Image Source: Zacks Investment Research

The stock faced selling pressure following the latest release, though, with the market unimpressed by weaker-than-expected sales guidance for its Q4. The poor price action following the print has boosted its annual yield marginally, with shares currently paying 0.4% annually.

It’s worth noting that MU has upped its payout twice over the last five years, translating to a 6.3% five-year annualized dividend growth rate.  

Broadcom Reports Record AI Revenue

Broadcom is evolving a broad portfolio of technologies to extend its leadership in enabling next-generation AI infrastructure. This includes foundational technologies and advanced packaging capabilities aimed at building the highest performance, lowest power custom AI accelerators.

The company’s recent set of quarterly results brought post-earnings fireworks, with record revenue from AI products of $3.1 billion pleasing investors in a big way. The quarter’s results were driven by robust demand for its AI solutions, leading it to up its current year sales and adjusted EBITDA guidance.

Analysts have accordingly raised their current year sales expectations, with AVGO forecasted to enjoy 43% Y/Y sales growth in FY24.

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Image Source: Zacks Investment Research

The company has long been a favorite among income-focused investors, currently sporting a shareholder-friendly 14% five-year annualized dividend growth rate. AVGO paid out $2.4 billion in dividends throughout its latest period.

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Image Source: Zacks Investment Research

TSM Sees Robust Sales Growth

Taiwan Semiconductor, a current Zacks Rank #2 (Buy), has also seen its earnings outlook shift bullishly across the board following favorable quarterly results that reflect rock-solid demand. The company is a global chip producer with a customer list that includes Nvidia and Advanced Micro Devices.

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Image Source: Zacks Investment Research

Following its latest release, CFO Wendell Huang stated, ‘Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies.’

The company’s growth has remained strong, with EPS climbing 30% year-over-year alongside a 32% sales climb throughout its latest quarter. Consensus expectations for its current fiscal year suggest 24% earnings growth paired with a 23% sales increase.

And for those seeking income, the company has got it covered, currently flexing a 5.5% five-year annualized dividend growth rate and a sustainable payout ratio sitting at 31% of its earnings. The valuation picture here isn’t stretched by any means either, with the current 0.9X PEG ratio reflecting a bargain relative to the growth expected.

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Image Source: Zacks Investment Research

Bottom Line

Investors love dividends. And over the last few years, they’ve also become accustomed to enjoying AI exposure.

For those seeking a blend of each, all three stocks above – Taiwan Semiconductor (TSM - Free Report) , Broadcom (AVGO - Free Report) , and Micron (MU - Free Report) – fit the criteria nicely, all in the midst of the AI boom while simultaneously rewarding shareholders via quarterly paydays.


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