Christopher Best is studying graduate-level finance at Florida International University. This article explains different types of
stocks that finance students learn about.
Blue Chips
Blue
chip stocks are the stocks from well-established, giant, most
prestigious companies with stellar reputations. Many of these companies
are household names. These stocks include Intel, General Electric, Visa,
Wal-Mart, and McDonald’s. Many blue chip companies have been in
business for over twenty-five years and have been the leader of their
industries for decades. These businesses are a great investment for
people looking to stay conservative in their stock picks.
Growth Stocks
Growth
stocks consist of businesses that show growth potentials. Many
enterprises in this category have sales, growth or market share that are
growing extremely fast. Companies that fall in this category usually
invest heavily in research and development. Growth stocks are riskier
than blue chips, but they also come with potentially bigger rewards.
These stocks perform best when stock prices are on the rise.
Income Stocks
Just
like growth stocks, income stocks do exactly what the category name
suggests. They provide a stable income for investors. Income stocks come
with regular payments of dividends that do not depend on the stock
price. Sometimes the dividends are big enough so that the investors can
completely cover their living expenses with dividend checks. Many of the
stocks in this category also fall in the blue-chip category.
Preferred Stocks
These
stocks are very similar to both stocks and bonds at the same time.
Usually, a preferred stock has a dividend and a redemption date.
Investors get their dividends regardless of how the company performs.
When a company is underperforming, preferred stock holders get paid
first. When a company is doing extremely well, certain preferred shares
may get more than one dividend payout. However, preferred stock owners
usually do not have the same rights as common stock owners.
If
you want to learn more about other types of stocks, you can do so by
studying multiple books on the subject just like Christopher Best of
Miami did.
