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 Verizon Communications Inc. (NYSE:VZ)) stands against other top 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).
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Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company. It has grabbed the attention of investors over the years because of its consistent innovation and strong cash position. In FY24, the company reported an operating cash flow of $37 billion and a free cash flow of $19.8 billion, reflecting growth from $18.7 billion in the previous year. Analysts are optimistic about the company’s future, especially following its partnership with NVIDIA to create an AI-driven enterprise solution that supports efficient AI applications on its secure 5G private networks with private Mobile Edge Computing. In addition, the company is exploring other AI-driven initiatives, such as network slicing and satellite connectivity, to create new revenue streams and strengthen its competitive edge.
Verizon Communications Inc. (NYSE:VZ) recently reported its Q4 2024 earnings, posting revenue of $35.7 billion, reflecting a 1.6% increase compared to the same period last year. This growth was driven by strong customer additions in both mobile wireless and internet services. In the mobile wireless segment, the company added 568,000 net postpaid phone subscribers, up from 449,000 in the same quarter last year. Revenue for this segment grew 3.1% year-over-year, reaching $20 billion, marking the 18th consecutive quarter of growth.
Due to its stable cash position, Verizon Communications Inc. (NYSE:VZ) was able to increase its payouts for 18 consecutive years, which makes it one of the best dividend stocks on Robinhood. The company currently offers a quarterly dividend of $0.6775 per share. The stock’s dividend yield on January 30 came in at 1.88%.
According to Insider Monkey’s database of Q3 2024, 57 hedge funds owned investments in Verizon Communications Inc. (NYSE:VZ), worth over $3.2 billion in total. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
Overall, VZ ranks 6th on our list of top best dividend stocks on Robinhood. While we acknowledge the potential for VZ 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 VZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.