Types of Stocks

Types of Stocks

There are different types of stocks available for investors, this is good as they each offer their own unique pros and cons. Together, they can be added to create a diversified portfolio. 

Some of the different options that you can choose from when working in the stock market include:

Value Stocks: 

A value stock is a stock that you are buying based on fundamental analysis that the stock is undervalued, you are buying it because it is currently undervalued. These tend to be more established companies.

Growth Stocks: 

These are stocks that are in growth markets, they usually trade at a higher Price/Earning ratio. Investors are investing in the future growth of the company versus its current earnings, which tend to be low. These companies tend not to pay dividends at the start.

The stocks of those companies that pay dividends to mean paying you in cash, maybe quarterly. When they earn, they will pay you as you will be the part owner of the company. Growth stocks typically don’t pay a  dividend. Still, they would like to reinvest in the company’s growth, e.g., in research and development or quality control research, so as a result, they will grow and their stock price will increase, that would be the reward of the patience of the stockholder. 

Dividend Stocks:

Many companies offer stocks that pay dividends. A dividend is a payment you receive as being a shareholder of the company, it is a distribution of profit. They can come from some companies quarterly or yearly.