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 Costco Wholesale Corporation (NASDAQ:COST) 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).
Is Costco Wholesale Corporation (COST) the Best Dividend Stock on Robinhood?
A customer in a warehouse aisles, browsing the wide range of branded and private-label products.
Costco Wholesale Corporation (NASDAQ:COST) is an American retail company that offers a wide range of related products to its consumers. The company had an exceptional 2024, with its shares climbing nearly 39%. This strong performance is supported by its consistent growth, as it has maintained resilience even while other retailers faced challenges from rising costs.
In fiscal Q1 2025, Costco Wholesale Corporation (NASDAQ:COST) reported a revenue of $62 billion, reflecting a 7.5% year-over-year growth. The company’s net income increased to $1.8 billion, up from $1.6 billion in the previous year. Costco also ended the quarter with a robust cash position of nearly $11 billion in cash and cash equivalents, compared to $9.9 billion in the previous quarter. Furthermore, it generated $3.3 billion in operating cash flow.
Analysts are positive about Costco Wholesale Corporation (NASDAQ:COST)’s growth prospects and past performance, noting that the company has secured a premium over its competitors through consistent market share gains and its effective retailing-as-a-service model that generates reliable membership fees. The company has established a solid competitive edge through its retail strategy, which includes membership-based pricing and bulk discounts. This approach has helped attract a growing, loyal customer base worldwide, as demonstrated by its recent quarterly results.
On January 23, Costco Wholesale Corporation (NASDAQ:COST) declared a quarterly dividend of $1.16 per share, which was in line with its previous dividend. Overall, the company has been growing its payouts for 20 consecutive years, which makes COST one of the best dividend stocks on Robinhood. The stock has a dividend yield of 0.47%, as of January 30.
The number of hedge funds tracked by Insider Monkey holding stakes in Costco Wholesale Corporation (NASDAQ:COST) grew to 75 in Q3 2024, from 71 in the previous quarter. The total value of these stakes is over $5.4 billion. Among these hedge funds, Chilton Investment Company was one of the company’s leading stakeholders in Q3.
Overall, COST ranks 4th on our list of best dividend stocks on Robinhood. While we acknowledge the potential for COST 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 COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
