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 Microsoft Corporation (NASDAQ:MSFT) 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).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational tech giant. The launch of DeepSeek’s R1 model has raised concerns for Microsoft, which has significant investments in OpenAI, the developer of the O1 series. However, the company’s CEO, Satya Nadella, known for his ability to pivot strategically, could turn this challenge into an opportunity. Nadella has previously embraced open-source strategies, such as adopting Chromium for Edge and expanding GitHub Copilot to support multiple AI models. In a market where AI is becoming increasingly commoditized, Microsoft’s Azure cloud platform could adapt by offering open-source models as APIs, integrating more cost-effective models like R1 into its offerings while maintaining appeal for enterprise customers. Although there may be short-term obstacles if OpenAI faces difficulties, Microsoft’s adaptability could position Azure as a leading player in the long run, even in a market with slimmer margins.
In fiscal Q2 2025, Microsoft Corporation (NASDAQ:MSFT) reported revenue of $69.6 billion, which showed a 12% growth from the same period last year. The company’s net income of $24.1 billion increased by 10% on a YoY basis. Microsoft 365 Commercial products and cloud services revenue grew by 15%, fueled by a 16% increase in Microsoft 365 Commercial cloud revenue.
Microsoft Corporation (NASDAQ:MSFT) also reported a strong cash position, ending the quarter with over $17.4 billion available in cash and cash equivalents. The company also generated $22.2 billion in operating cash flow, up from $18.8 billion in the prior-year period. It also returned $9.5 billion to investors through dividends and share repurchases. The company currently pays a quarterly dividend of $0.83 per share and has a dividend yield of 0.80%, as of January 30. It is one of the best dividend stocks on Robinhood with 19 consecutive years of dividend growth under its belt.
At the end of Q3 2024, 279 hedge funds tracked by Insider Monkey held stakes in Microsoft Corporation (NASDAQ:MSFT), the same as in the previous quarter. These stakes have a total value of more than $91 billion. Among these hedge funds, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q3.
Overall, MSFT ranks 1st on our list of best dividend stocks on Robinhood. While we acknowledge the potential for MSFT 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 MSFT 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.
