Key Highlights

• Understanding different stock categories helps investors reduce risk and diversify their portfolios.
• Preferred stock offers priority in dividend payments but doesn’t come with voting rights.
• Income stocks provide steady dividends, ideal for investors looking for regular income.
• Blue-chip stocks represent stable, large-cap companies with a reliable earnings history.
• ESG stocks focus on ethical practices, including environmental and social responsibility.

Common and Preferred Stocks

Common stock, or ordinary shares, represent a share of ownership in a company and give investors voting rights on corporate policies and board elections. Common shareholders receive dividends and can claim assets during liquidation, but only after debt and preferred stockholders are paid.

On the other hand, preferred stock guarantees regular dividend payments and priority in asset distribution if a company faces liquidation, though it does not include voting rights. This type is ideal for investors seeking steady income.

Growth Stocks vs. Value Stocks

Growth stocks are equities expected to grow faster than the market average, often thriving during economic expansion and periods of low interest rates. Tech stocks are a notable example, as they have outperformed in recent years due to strong economic support. Growth stocks can be tracked through ETFs like the SPDR Portfolio S&P 500 Growth ETF (SPYG).

In contrast, value stocks are typically undervalued relative to their actual performance and tend to outperform during economic recovery phases. Examples include stocks in the financial, healthcare, and energy sectors, often known for generating consistent income streams. The SPDR Portfolio S&P 500 Value ETF (SPYV) is a popular option for tracking value stocks.

Income Stocks

Income stocks are known for providing regular income through dividends that are generally higher than the market average. These stocks, such as those in the utility sector, offer lower volatility and modest capital appreciation, making them suitable for conservative investors looking for steady income. The Amplify High Income ETF (YYY) is a good resource for accessing income stocks.

Blue-Chip Stocks

Blue-chip stocks are shares of established, large-cap companies with a strong reputation for stability and reliability. These stocks are often favored by conservative investors during uncertain economic times. Examples include giants like Microsoft Corporation (MSFT), McDonald’s Corporation (MCD), and Exxon Mobil Corporation (XOM).