What is a widow-and-orphan stock?

It’s a low-risk stock that pays high dividends. This type of investment is often associated with big companies that have a long track record of performing strongly and consistently, even in testing economic climates and bear market conditions.

Where have you heard about widow-and-orphan stocks?

The term ‘widows and orphans’ stems from the fact that they were the only investments suitable for the most vulnerable members of society during economic downturns. However, the 2008 recession showed that even the most resilient of companies can struggle when times get really hard.

What you need to know about widow-and-orphan stocks.

You’ll most likely find widows and orphans in non-cyclical industries that are less likely to be affected negatively during difficult trading conditions.

They've traditionally tended to be associated with companies that have a monopoly over the market, such as utility and telecommunications providers. Because there’s little or no competition among suppliers, the stock is much sought after and consistently yields excellent dividends as the customer base remains solid or increases.

Find out more about widow-and-orphan stocks.

Read our definition of low-risk investment to find out more about cautious investing.