Widow and Orphan Stock

A stock that pays high dividends and carries very low risk is called a widow and orphan stock. Such stocks mostly exist in non cyclical industries that are less likely to be negatively impacted during economic downturns. Widow and orphan stock maintain their dividend payment to shareholders even during difficult times. The term widow and orphan comes from the fact that these stocks are considered safe by investors mainly during economic storms and are particularly fit for widows and orphans who are the most vulnerable members of the society and are economically incapable of facing economic downturns. Initially, AT & T was considered to be a widow and orphan stock and was used by all classes of investors. As such stocks provide low returns irrespective of the company size, investors may shy away from them. They do not grow substantially in value, but provide a reliable and low risk investment opportunity

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Edited and Updated 31st May 2014

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