S&P's Financial Focus

Types of Stock Investments

Understanding the types of stock investments will allow you to buy and sell shares of stocks.

Make a Chart Use the following information to help you identify the different types of stock investments for your chart:

Blue-Chip Stocks Costly, but a good investment for conservative investors, because the stocks are issued by safe, stable, large corporations.

Income Stock Pays higher-than-average income dividends that are predictable. Dividends are company profits paid to stockholders in either cash or more shares. Issued by gas and electric companies and large companies.

Growth Stock These stocks are issued by corporations with potential earnings that are higher than the average earnings predicted for other companies in the same business. Generally, dividends are not paid.

Cyclical Stock The state of the nation’s economy is reflected in these stocks. If the economy is good, the stocks increase in value; if the economy is poor, the stocks decrease in value.

Defensive Stock Issued by companies with steady earnings, so dividends are paid even when the economy is in decline. Blue-chip stocks and income stocks may also be considered defensive stocks.

Large-Cap Stock This is the stock of a corporation that has issued a large number of shares of stock and has a large amount of capitalization, or the total amount of stocks and bonds issued by a single corporation.

Penny Stock These are very risky stocks usually issued by new companies generally sell for $1 to $10 a share.

Standard and Poor’s publishes the globally recognized S&P 500® financial index and provides credit ratings. It also gathers financial statistics, information, and news, and analyzes this data to help individuals, companies, and governments make financial decisions. Go to www.standardandpoors.com to learn more about this company.