M ONEY & FIN AN C E
STOCKS
Utility Stocks, Blue Chip Stocks and Growth Stocks
This month, we will discuss different types of stocks that people invest in. Last month we looked at bonds and fixed income strategies and this month we will see how stocks can work in your portfolio of investments. The first type of stocks that we will discuss is utility stocks. These are holdings in companies that are regulated utility companies such as electric companies, natural gas companies, and cable and telephone companies. People like to invest in these companies because they are companies that most people need. They typically provide a steady stream of income and they usually pay very nice dividends. The cash flow from the dividends which can help fund some retirement income and other income for people looking to get regular dividends to live on. This type of stock is frequently in the portfolio of a retired person looking to generate income and to get some growth in the share value of their stock. It is also the type of stock that many people add dividend reinvestment plans to, so the dividends purchase additional shares of stock. This is nice because as the dividends purchase more shares, the market value will hopefully continue to rise in value. If the share price drops, you will usually get more shares from the dividend reinvestments. If the dividend rate drops, this can sometimes hurt the share price.
40 | Oct | Nov 2014