Turn on cable news and you’re reminded that investors live in perilous times. But the surest way to make money over the long haul is to control your emotions and see the world the way it really is, not the way you want it to be. Dispassionate analysis, not wishful thinking, is the true path to investment wealth.

One stock that garners a lot of splashy news headlines, both positive and negative, is Broadcom (NSDQ: AVGO). What’s relevant and what’s hyperbole?

Below, we sift through the Broadcom drama to determine the key takeaways for investors.

What’s In this edition of Investing Daily?

• Why Broadcom is capturing headlines.
• Broadcom’s performance in 2017/2018.
• Should you buy Broadcom?
• Should you sell Broadcom?
• Our final forecast and outlook for Broadcom in 2019.

Let’s get into it!

What Is Broadcom?

Based in San Jose, California, Broadcom is a designer, developer and global supplier of products based on analog and digital semiconductor technologies within four primary markets: wired infrastructure, wireless communications, enterprise storage, and industrial & others.

With a market cap of $94.3 billion, Broadcom offers a broad portfolio of products for wired and wireless communications and storage, with a huge role to play in the roll-out of 5G. Broadcom has evolved into a company in which wireless and wired communications each contributes significant revenues.

This video quickly summarizes Broadcom’s sweeping corporate history:

How Has Broadcom Stock Performed?

Broadcom is a semiconductor industry bellwether and accordingly, it has risen (or fallen) generally in tandem with the sector’s fortunes.

The tech sector’s ascendancy has been a tailwind for Broadcom, but headwinds include protectionist trade policy and flagging chip demand after years of torrid growth. Broadcom has been on the front lines of the increasingly bitter global trade war.

And when major investment banks in 2018 released pessimistic assessments over chip demand for 2019, Broadcom was among those stocks that got hit the hardest.

What Is Broadcom Stock History?

Broadcom has lost 17.7% over the past 12 months, compared to a gain of 6.3% for the S&P 500. Over the past two years, Broadcom has gained 36.2% compared to a gain of 27.3% for the S&P 500. Over the past five years, Broadcom has gained a whopping 411.6%, versus a gain of 53.2% for the S&P 500.

How Has Broadcom Performed In 2017/2018?

Broadcom gained 44% in 2017, handily beating the S&P 500’s gain of 19.4%. Year to date in 2018, Broadcom has lost 14.5%, compared to the S&P 500’s gain of 2.2%. Weighing on Broadcom have been the U.S.-China tariff battles and fears of a slowdown in growth of the smartphones and electronic devices that use the company’s chips.

The following chart, compiled with data from research firm Statista, depicts shares of the microprocessor market worldwide in 2018, by vendor. It shows that Broadcom is number five in market share:

Who Are Broadcom Rivals?

Qualcomm (NSDQ: QCOM)

Based in San Diego, California, Qualcomm is a semiconductor and telecommunications equipment company that designs and markets wireless telecom products and services.

With a market cap of $93.4 billion, Qualcomm owns intellectual property tied to code division multiple access (CDMA), a vital technology that underpins all 4G sand 5G standards.

Major telecom carriers are launching faster and more robust 5G networks. Qualcomm earns a royalty based on the price of every 4G and 5G handset sold.

Read Also: Qualcomm Stock Prediction

Advanced Micro Devices (NSDQ: AMD)

AMD’s core products include microprocessors, motherboard chipsets, embedded processors, central processing units (CPUs), and graphics processing units (GPUs).

Advanced Micro Devices has been diversifying into breakthrough technologies, such as virtual reality (VR), artificial intelligence (AI), cloud computing, and the Internet of Things (IOT).

Read Also: AMD Stock Prediction

Intel (NSDQ INTC)

Intel is the largest maker of semiconductors in the world, but the migration away from PCs toward smartphones has hurt the company.

Intel’s PC business remains its biggest operating unit, accounting for two-thirds of sales. Intel is likely to continue its dominance of the PC microprocessor market over the long haul, thanks to a strong R&D budget.

Intel also is focusing on the development of new, ultra-fast chips for smartphones, but the company remains a laggard in mobile technology.

Will Broadcom Go Up In 2019 (Should You Buy)?

Broadcom’s forward price-to-earnings (P/E) ratio is 10.5, a bargain compared to the forward P/E of the S&P 500 (at 15.3) and the semiconductor manufacturing sector (11.3). Total cash on hand is $4.1 billion, a huge war chest for future acquisitions.

The 2017 U.S. tax cut package already is boosting merger and acquisition (M&A) activity in the technology sector. According to the latest figures from Thomson Reuters, worldwide M&A totals $1.7 trillion, up 64% compared to year-to-date 2017. Technology, media and telecom M&A nearly tripled compared to a year ago, with $420.6 billion in deals announced.

Manhattan-based CA Technologies was absorbed into Broadcom in November 2018 with the close of an $18.9 billion acquisition announced in July 2018. The deal’s completion followed regulatory approval by the European Union in October.

The CA acquisition represents Broadcom’s attempt to diversify away from semiconductors; CA makes software mostly for mainframe computers.

Broadcom CEO Hock Tan said the main purpose of the merger is to give Broadcom access to CA’s customers, particularly the large corporations that for years have been buying CA’s software. Tan thinks Broadcom can get these customers to buy Broadcom cloud and connectivity-related products, making the acquisition supportive of growth.

What’s more, Broadcom’s connectivity franchises make it highly leveraged to the IOT, an area that promises explosive growth. More than 50% of the company’s revenues come from China, where existing urban areas are slated to become mega cities of 100 million people or more. These vast urban areas will feed demand for IOT.

Will Broadcom Go Down In 2019 (Should You Sell)?

Tech stocks have climbed their way back to the lofty heights of the dot-com boom, which should concern you. The windfall from U.S tax cuts has provided much of the fuel, but countervailing forces include the trade war and rising interest rates.

Indeed, the worsening global trade war poses a serious impediment for Broadcom.

Broadcom gets more than 20% of its sales from China. The country doesn’t need to impose tariffs to punish the company; Beijing has other tools available. It could initiate boycotts and regulations, or simply cut off its supply of rare earth minerals Broadcom and its customers need for their manufacturing processes.

Evidence of the trade war’s damage became apparent when the potential merger between Broadcom and its rival chipmaker Qualcomm was blocked by the Trump administration in 2018. The culprit: U.S.-China animosity.

Broadcom has long sought to acquire Qualcomm in what would have been the largest tech merger in history at $117 billion. However, Qualcomm rejected each offer. Broadcom then attempted a hostile takeover, but the U.S. Treasury Department stepped in to block the deal.

The U.S. government expressed national security concerns, as well as a fear that China would gain a strategic advantage in telecom technology. Broadcom’s reach extends widely throughout Asia; it was formerly based in Singapore. The Treasury Department asserted that “China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover.”

Broadcom has made many acquisitions in its history. In its present form, the company is the result of the 2016 merger between Avago and the legacy Broadcom. But the canceled Qualcomm merger would have been a gamechanger for the semiconductor industry.

Tech investors see the intervention of Uncle Sam in the proposed merger as a sign that perhaps other deals will get scuttled in the name of an “America First” policy.

Read Also: Where’s Nvidia’s stock predicted to be?

Overall Broadcom Forecast And Prediction For 2019

As synergies among Broadcom and its merged entities such as Avago and CA unfold, earnings and revenue growth should hit double-digits well into the next decade.

The trade war remains a concern but with the Democrats now in control of the House of Representatives, there’s a powerful check in Washington, DC on President Trump’s protectionist trade policies.

What’s more, analysts’ dire predictions that overall chipmaker growth will sputter in 2019 are overwrought. After a huge run up, the industry was due for a breather. Demand for Broadcom’s products will stay strong because of global population growth, urban expansion, and technological innovation.

The average analyst expectation is that Broadcom’s year-over-year earnings growth in the current fiscal year will reach 28%. Five-year earnings growth is expected to hit 12.3%, on an annualized basis.

Broadcom has a proven track record of not only integrating its acquisitions, but also squeezing out cost savings from them.

Which brings me to an underappreciated appeal of Broadcom: its robust 3.17% dividend yield.

When choosing dividend stocks, investors make the common mistake of solely focusing on the obvious choices, such as real estate investment trusts (REITs), master limited partnerships (MLPs), and utilities.

But you should think outside the dividend box. One often overlooked income-generating sector is technology.

That’s right, technology.

Tech stocks are booming largely because of increased IT spending among corporate clients, confident consumers who are gobbling up the latest gadgets, and lower corporate taxes that allow tech behemoths to repatriate their cash hoards from overseas.

Conservative income investors tend to shy away from the technology sector, because they perceive it as too risky and volatile. However, the quickening pace of innovation is driving earnings growth and cash flow in the tech sector, prompting many Silicon Valley giants to offer not only capital appreciation but healthy dividends as well. With its attractive dividend yield, Broadcom is a salient case in point.

If you want to retire comfortably, you need to build a multi-faceted portfolio that not only includes classic dividend payers (e.g. REITs, MLPs and utilities), but also stocks from other less obvious sectors — notably technology — that bestow dividend growth and the potential for capital appreciation. Broadcom offers a combination of both growth and income for 2019 and beyond.

John Persinos is the managing editor of Investing Daily.