Long-Run Stock Advice: Consider "Widow-and-Orphan" Stocks

Getting good stock advice can be difficult because there are many different investment strategies and it seems like everyone has their own, differing, opinion. As a new investor, you may want to consider investing in widow-and-orphan stocks, because this has been a successful strategy for many years. Here are the basics of widow-and-orphan stocks and how they could help you as an investor.

Widow-and-Orphan Stocks

The term widow-and-orphan stock has been around for many years. Many investors have purchased the stocks successfully as part of a number of different investment strategies. The term widow-and-orphan stock means that the company you are investing in is a very safe and strong companies. This is the type of company that even widows and orphans can invest their life savings in because they know that the company will last. Traditionally, this type of stock also refers to a company that pays a regular dividend to shareholders. Therefore, this represented a very safe investment strategy that could provide a regular source of income.

Utility Stocks

One of the most popular stocks that fits into this category are utility stocks. These are stocks that are issued by utility companies all across the United States. Utility companies fit into this category because of the government mandated monopoly that they have in place. Utility companies know that they are the only game in town and everyone has to use them for their utility needs. Therefore, as an investor, you can purchase stock in a utility company, hold it for a number of years, and simply collect the dividends that it pays out to investors. This is a very safe investment strategy that has worked ever since utility companies started selling stocks. Even though it is an old strategy, it still works in today's market. This is one of the safest categories of window-and-orphan stocks available in the market.

Blue Chip Companies

Another type of widow-and-orphan stock is made up of blue chip companies. These are the large companies that represent the leaders in their particular industry. The thought of them ever going out of business would seem preposterous to any investor. They look as if they will be in business for long-term and they have a good history of paying dividends to their investors. In today's world, this could refer to companies like Wal-Mart. 

As an investor, you will want to remember that nothing is a sure thing. Many years ago, everyone thought it would be impossible for AT&T to be affected by anything. Then the government ruled that they had created a monopoly and broke them up into smaller companies. This type of thing could happen to any large company and should therefore be considered by potential investors for this method.

Investment Considerations

This type of strategy is very good for the conservative investor. It does not provide much growth in the portfolio, but it can provide a steady source of income over the long haul. Therefore, if you value a regular dividend, widow-and-orphan stocks could be for you.

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