What Are Large-Cap Stocks?
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What Are Large-Cap Stocks?
Stocks of the largest companies of all—IBM, GE, and other movers and shakers of the economy—are classified as large-cap stocks.
Things To Know
- Large-cap stocks are the stocks of large, established companies.
Characteristics of large-cap stocks
These are large, established companies (many are blue chips). They often keep large reserves of cash to take advantage of new business opportunities.
Because of their large size, large-cap stocks are not expected to grow as rapidly as smaller-capitalized companies. Successful mid-caps and the small-caps tend to outperform them over time. Investors looking for dividends and preservation of capital with some growth potential choose them. Large-cap stocks tend to pay relatively more in dividends than small-cap and mid-cap stocks.
Who chooses large-cap stocks?
Investors who want their investment to grow in the long term without taking on as much risk as mid and small-cap stocks have historically been attracted to large-cap stocks.
