Return to Types of corporations home.
| Type | Suited for which type of investor |
Expansion opportunities |
Competition | Does what with profits | Relates to | Watch out for | ||||||
| Defensive | Conservative, who wants to be proactive when recession appears imminent | Average | Average | Usually pays out enough for substantial dividends with some kept to grow business | The best may also be blue chips | Some things thought to be defensive may not be, such as fuel and prescription meds | ||||||
| Income | Conservative, retirees who need recurring cash payments and who can’t afford big losses | Limited | Limited | Pays most out as dividends | Opposite of growth | Corporations with dividend yields that are very high, as they may be about to cut the dividend | ||||||
| Growth | Aggressive, younger investors who can make up for losses if they occur | Tremendous | Especially fierce | Keeps all or nearly all for growing the business | Opposite of income | Not all corporations can dominate huge new markets. Shares price of those which fail can drop dramatically | ||||||
| Blue chip | Average risk taker who wants some income but also some growth potential | Average | Average | At least a minimal dividend payout but can be significant enough to compete with income corporations | Can also be defensive. Opposite of penny | A dying breed as it’s harder than ever to stay on top, evidenced by many meltdowns among former blue chips | ||||||
| Value | Conservative, patient investor who wants to reduce risk of downward move in share price | Average | Average |
Varies from no dividend payout to reasonable dividend |
“Value trap”, as the share prices of some doomed corporation pause on the way down | |||||||
| Cyclical | More involved, one who wants to profit from state and direction of the economy | Good during economic expansions, poor during recessions | Average |
Varies from no dividend payout to reasonable dividend |
Opposite of counter-cyclical. Difficult to also be a blue chip | Prolonged recessions and the cutting of dividends to help them survive | ||||||
| Counter-cyclical | Alert “go anywhere” investors who want their investments to be on offense at all times | Poor during broad economic expansions, good during recessions | Average |
Varies from no dividend payout to reasonable dividend
|
Opposite of cyclical | Governments which may act to limit practices they see as abusive to consumers | ||||||
| Penny | Gamblers | Tremendous | Varies |
If it has profit, keeps all of it to grow business |
Opposite of blue chip | “pump and dump” schemes, where fake positive news and buzz temporarily drive share price higher |