ClearBridge Investments, an investment management company, released its “ClearBridge Dividend Strategy” fourth-quarter 2025 investor letter. The strategy focuses on generating high current income, income growth, and capital preservation by investing in high-quality large-cap companies that offer attractive dividends and potential for significant dividend growth. A copy of the letter can be downloaded here. The market continued its high degree of concentration in the fourth quarter of 2025. This is the third consecutive year of an AI-driven market. The market-cap-weighted S&P 500 Index returned 17.9% while the equal-weighted S&P 500 Index gained just 11.4% in the year. In this environment, the strategy also enjoyed significant gains due to its exposure to AI participants. However, the strategy underperformed its S&P 500 Index benchmark during the fourth quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, ClearBridge Dividend Strategy highlighted stocks such as Broadcom Inc. (NASDAQ:AVGO). Broadcom Inc. (NASDAQ:AVGO) is a leading technology company that designs and develops various semiconductor and infrastructure software solutions. The one-month return of Broadcom Inc. (NASDAQ:AVGO) was -15.47%, and its shares gained 49.80% of their value over the last 52 weeks. On January 7, 2026, Broadcom Inc. (NASDAQ:AVGO) stock closed at $343.50 per share, with a market capitalization of $1.629 trillion.
ClearBridge Dividend Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its fourth quarter 2025 investor letter:
“With several leading AI companies now sporting multitrillion-dollar valuations, it is clear they reflect lofty expectations. As their prices rise and valuation multiples expand, the investment case evolves and can become less favorable. A brief review of our investments in Oracle and Broadcom Inc. (NASDAQ:AVGO) illustrates how we approach this type of environment. While both stocks surged in 2025, we significantly reduced our position in Oracle, while largely maintaining our position in Broadcom.
In contrast, while Broadcom also soared in 2025, we did not radically reduce our exposures. The company’s leadership as an ASICS chip provider positions it as one of a few potential competitors to Nvidia. While Nvidia continues to dominate the AI compute market, customers are flocking to Broadcom to diversify their supplier base. Because these ASICS chips are Broadcom’s core competency, these sales yield increasing profit margins and returns for the company. Broadcom shares could still disappoint investors if competition increases, pricing decreases or volumes underwhelm, but its overall risk is likely still lower than Oracle’s. Broadcom’s AI strategy plays to its core strengths and does not require substantial, incremental capital outlays.”
Broadcom Inc. (NASDAQ:AVGO) is in the 12th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 183 hedge fund portfolios held Broadcom Inc. (NASDAQ:AVGO) at the end of the third quarter, which was 156 in the previous quarter. While we acknowledge the risk and potential of Broadcom Inc. (NASDAQ:AVGO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Broadcom Inc. (NASDAQ:AVGO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Broadcom Inc. (NASDAQ:AVGO) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
