Large Cap (Big Cap)
Candlefocus EditorLarge-cap stocks typically offer investors a combination of historical stability, established dividend payments, and ease of liquidity. Little turnover occurs in these stocks and the overall volatility of these stocks tend to be lower than smaller companies. Trade execution of these stocks is fairly straightforward and can provide a familiar safety net for novice investors.
For more experienced, experienced investors, large-cap stocks might appeal to their value-seeking strategies. Since they represent a larger share of the overall stock market, large-cap stocks often contain inherently pricier stocks as well as companies with better financial performance. By weighing the ratio of stock price, relative to the company’s profits and assets, investors using a value-seeking strategy can look for a large-cap stock to purchase cheaply, relative to the company’s performance.
These stocks also represent an opportunity for investors looking to supplement an income from dividends. Many large-cap stocks offer established dividends to reward investors for long-term commitment to the company’s stock. For the large-cap investor, these dividends can contribute a significant portion of the total return, provided the dividends are consistently paid.
Overall, large-cap stocks may present a safe haven for novice investors, as well as opportunities for experienced investors looking to generate returns on their investments. These stocks offer benefits including stability, liquidity, and dividends. Investors interested in large-cap stocks should make sure they understand the risks and rewards of these stocks before they make any investments.