Contrasting Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO)

Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO) are both large-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.

Dividends

Qualcomm pays an annual dividend of $3.68 per share and has a dividend yield of 1.7%. Broadcom pays an annual dividend of $2.60 per share and has a dividend yield of 0.7%. Qualcomm pays out 40.0% of its earnings in the form of a dividend. Broadcom pays out 43.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Qualcomm has increased its dividend for 23 consecutive years and Broadcom has increased its dividend for 15 consecutive years. Qualcomm is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Qualcomm and Broadcom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Qualcomm	22.31%	42.11%	19.33%
Broadcom	38.85%	41.61%	19.55%

Valuation and Earnings

This table compares Qualcomm and Broadcom”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qualcomm	$44.28 billion	5.10	$5.54 billion	$9.20	23.27
Broadcom	$63.89 billion	28.05	$23.13 billion	$6.00	62.79

Broadcom has higher revenue and earnings than Qualcomm. Qualcomm is trading at a lower price-to-earnings ratio than Broadcom, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Qualcomm and Broadcom, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qualcomm	3	16	15	0	2.35
Broadcom	0	3	29	1	2.94

Qualcomm presently has a consensus price target of $184.29, indicating a potential downside of 13.91%. Broadcom has a consensus price target of $490.13, indicating a potential upside of 30.11%. Given Broadcom’s stronger consensus rating and higher probable upside, analysts clearly believe Broadcom is more favorable than Qualcomm.

Risk and Volatility

Qualcomm has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500.

Insider & Institutional Ownership

74.4% of Qualcomm shares are owned by institutional investors. Comparatively, 76.4% of Broadcom shares are owned by institutional investors. 0.1% of Qualcomm shares are owned by insiders. Comparatively, 1.9% of Broadcom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Broadcom beats Qualcomm on 12 of the 18 factors compared between the two stocks.

About Qualcomm

Qualcomm Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.