Widow-and-Orphan Stock

A Widow-and-Orphan Stock is a relatively low-risk stock from a well-known firm that pays high dividends.

Widow-and-Orphan stocks are popular during bear markets because they are generally able to continue their dividend payments during a down turn in the market even if it is for a protracted period.

During bull markets these stocks are often ignored.

The term comes from the fact that widows and orphans need a steady income to house and feed them and for that reason the best investments for them are ones that provide a reliable and steady dividend stream.

Characteristics of a Widow-and-Orphan stock

• strong financial position
• non-cyclical industry
• consistent dividend amount
• consistent dividend payment
• consistent dividend growth

The main difference between a blue chip stock and a Widow-and-Orphan stock is that a blue chip stock is not required to pay a dividend to be a blue chip stock.