We recently published a list of Top 10 Best Dividend Stocks on Robinhood. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other best dividend stocks on Robinhood.

The start of 2020 marked a turning point for retail trading, driven by increased market volatility, stay-at-home orders, and commission-free trading across platforms, which led to a surge in activity and a rise in new traders. Many of these new traders, particularly in their 20s and 30s, found the stock market more accessible than ever, as high prices had previously kept them from participating. With sports events canceled, many turned to stock trading as a replacement for sports betting.

As stock prices hit historic lows, younger investors flocked to platforms like Robinhood. Founded in 2013 by Vladimir Tenev and Baiju Bhatt, Robinhood quickly became a fintech favorite. The app, which pioneered commission-free trading, amassed 13 million user accounts and gained significant brand recognition, surpassing legacy brokerages like Charles Schwab and Fidelity, as well as app-first competitors like Webull and Dough.

According to analysts, Robinhood has significant growth potential, particularly if it can encourage customers who have opened accounts to invest larger sums of money on the platform. Piper Sandler analyst Patrick Moley highlighted that while 10% of US adults have a funded account with Robinhood, the company currently controls less than 0.3% of the $65 trillion in retail assets in the US As of June 2024, Robinhood has facilitated over $200 million in asset transfer and retirement account contribution matches for its customers. This initiative helped the company secure over $13 billion in net deposits during the second quarter, with assets under custody reaching a record $140 billion—an increase of 57% from the previous year. Additionally, retirement assets more than doubled, nearing $9 billion.

Though Robinhood experienced significant growth in its customer base during the COVID-19 pandemic, as people stayed home and invested in their government stimulus checks, years later, the platform has continued to attract even more customers, many of whom have become more knowledgeable and now expect advanced tools, which Robinhood has adapted to offer.

Robinhood has been focusing on organic growth by implementing strategies such as deposit matches and marketing initiatives, as well as investing in both its current operations and new ventures. Additionally, the company has been using mergers and acquisitions (M&A) to accelerate its business expansion.

In addition to technological improvements, shifts in asset classes and market structure have also played a role in the emergence of new investment products. One of the most notable innovations in 2024 was the introduction of event contracts, especially those based on elections. In addition, many other brokerages, fintech firms, and financial institutions introduced a wide range of new products that reshaped how retail investors could manage their investments, all while generating profits. The shift began in January when the Securities and Exchange Commission approved spot bitcoin (BTCUSD) exchange-traded funds. This decision enabled retail investors to gain cryptocurrency exposure through their brokerage accounts, eliminating the need to open digital wallets for direct crypto purchases.

Our Methodology

For this article, we performed an extensive analysis of leading financial websites to identify 10 dividend stocks available on Robinhood. Our selection process was based on a consensus approach, where we considered only those stocks that consistently appeared across multiple sources during our research. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024. The stocks are ranked according to hedge funds having stakes in them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 86

Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based pharmaceutical company that offers innovative health solutions to its consumers. The company has established itself as a leader in specialty pharmaceuticals and oncology, with its leading cancer medication, Keytruda, revolutionizing treatment methods and driving substantial revenue growth. Its strong market presence generates significant cash flow, which is then used to provide returns to shareholders. In the most recent quarter, Keytruda’s sales rose 17% compared to the previous year, reaching $7.4 billion.

Merck & Co., Inc. (NYSE:MRK) is making significant strides in diversifying its drug pipeline. Originally, it projected an additional $35 billion in revenue from its new drug portfolio at the start of 2024, but that estimate has now increased to $50 billion. This growth is mainly driven by a notable expansion in its clinical trials, with 26 phase III trials currently ongoing, up from just nine in 2021. Some of these trials have the potential to produce blockbuster drugs, especially in HIV treatments. In addition, the company has partnered with Gilead Sciences on a combination therapy that could revolutionize HIV care.

Merck & Co., Inc. (NYSE:MRK) is one of the best dividend stocks on Robinhood as the company maintains a 14-year streak of consistent dividend growth. The company’s quarterly dividend currently comes in at $0.81 per share and has a dividend yield of 3.28%, as of January 30.

Merck & Co., Inc. (NYSE:MRK) was included in 86 hedge fund portfolios at the end of Q3 2024, according to Insider Monkey’s database. The stakes owned by these funds are worth over $7.1 billion in total. With over 14.6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.

Overall, MRK ranks 2nd on our list of best dividend stocks on Robinhood. While we acknowledge the potential for MRK 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 MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.