WIDOW AND ORPHAN STOCK

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A widow and orphan stock is a stock that reliably provides a regular dividend while also yielding a slow but steady rise in market value over the long term.
Widow and orphan stocks are usually in non-cyclical sectors such as utilities and consumer staples, which tend to hold up better during economic downturns. They generally provide low, but steady returns cushioned partly by their dividends or company persistent good performance or monopoly-like positions.

In comparison, growth stocks with high price-earnings multiples that do not pay dividends are the opposite of widow and orphan stocks.

Widow and orphan stocks typically maintain their dividend payments to shareholders even through difficult financial times; such stocks do not grow substantially in value, but offer a reliable, low risk investment opportunity.

Investdata Academy

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