The main types of stock are common and preferred. Stocks are also categorized by company size, industry, geographic location and style. Here's what you should know about the different types of stock.
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How to Start Investing in StocksWhat Is the Average Stock Market Return?How to Make Money in Stocks in 2026: 6 Easy StepsHow to sell stock: A 3-step guide for beginnersNerdy takeawaysA stock is an investment into a public company. When a company sells shares of stock to the public, those shares are typically issued as one of two main types of stocks: common stock or preferred stock. Here’s a breakdown.Brokerage firms
If you’re new to investing in stock and looking to buy a few shares, you likely want to invest in common stock, which is exactly what the name suggests: the most common type of stock.When you own common stock, you own a share in the company’s profits as well as the right to vote. Common stock owners may also earn dividends — a payment made to stock owners on a regular basis — but those dividends are typically variable and not guaranteed.
2. Preferred stock
The other main type of stock, preferred stock, is frequently compared to bonds. It typically pays investors a fixed dividend. Preferred shareholders also get preferential treatment: Dividends are paid to preferred shareholders before common shareholders, including in the case of bankruptcy or liquidation.Preferred stock prices are less volatile than common stock prices, which means shares are less prone to losing value, but they’re also less prone to gaining value. In general, preferred stock is best for investors who prioritize income over long-term growth.» Learn more: How to make money investing in stocks» Learn more: Common stockPreferred stock ProsPotential for higher long-term return.Voting rights.Dividends are typically higher, fixed and guaranteed.Share price experiences less volatility.Preferred shareholders are more likely to recover at least part of investment in case of bankruptcy.ConsDividends, if available, are often lower, variable and not guaranteed.Stock price and dividend may experience more volatility.More likely to lose investment if the company goes bankrupt.Lower long-term growth potential.No voting rights in most cases.Best for Investors looking for long-term growth. Investors looking for income. Within those broad categories of common and preferred, different types of stocks are further divided in other ways. Here are some of the most common:
3. Large-cap stocks, mid-cap stocks and small-cap stocks
You might’ve heard the words large-cap or mid-cap before; they refer to market capitalization, or the value of a company. Companies are generally divided into three buckets by size: Large cap (market value of $10 billion or more), mid-cap (market value between $2 billion and $10 billion) and small-cap (market value between $300 million and $2 billion).Make sense of the markets with The Nerdy InvestorA weekly wrap on what's moving markets, plus two monthly deep-dives on how to improve your investing, straight to your inbox.Subscribe for free
4. Sector stocks
Companies can also be classified into sectors based on what their core business is. The Global Industry Classification Standard (GICS) divides the market into 11 sectors:EnergyMaterialsIndustrialsConsumer discretionaryConsumer staplesHealth careFinancialsInformation technologyCommunicationUtilitiesReal estateStocks in the same sector — for example, the technology or energy sectors — may move together in response to market or economic events. That’s why it’s a good rule of thumb to diversify by investing in stocks across sectors. (Just ask someone who held a portfolio of tech stocks during the dot-com crash.)
5. Domestic and international stocks
Stocks are frequently grouped by geographic location. You can diversify your investment portfolio by investing not only in companies that do business in the U.S., but also in companies based internationally and in emerging markets, which are areas that are poised for expansion. (Here’s more on how to invest in international stocks.)
6. Growth and value stocks
You might hear stocks described as growth or value. Growth stocks are from companies that are either growing quickly or poised to grow quickly. Investors are typically willing to pay more for these stocks, because they’re expecting bigger returns.Value stocks are essentially on sale: These are stocks investors have deemed to be underpriced and undervalued. The assumption is these stocks will increase in price, because they’re either currently flying under the radar or suffering from a short-term event.
Types of stock classes
Companies might also divide their stock into classes, in most cases so that shareholder voting rights are differentiated. For example, if you own Class A of a certain stock, you might get more voting rights per share than owners of Class B of the same stock.If a stock has been segmented into different classes, each class typically has its own ticker symbol. For example, 21st Century Fox shares are sold under FOXA (A shares) and FOX (B shares).
Choosing the right stocks for you
An important consideration when investing in stocks isn’t necessarily the stock’s category, but whether you believe in the company’s long-term growth potential and whether the stock complements the other investments you own.But if the idea of assembling individual stocks into a diversified portfolio seems daunting — and it certainly can be — you might want to consider stock index funds.Index funds are one of the easiest ways to build a diversified portfolio. These funds allow you to purchase many different types of stocks in a single transaction: They track a section of the market — such as large-cap stocks — by following a benchmark index, like the S&P 500. For more about index funds, read our full explainer.Neither the author nor editor held positions in the aforementioned investments at the time of publication.Neither the author nor editor held positions in the aforementioned investments at the time of publication.Explore more on
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About the authors O'SheaArielle O’Shea leads the investing, advisory and taxes content teams at NerdWallet. She has covered personal finance and investing for 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.Published in TaubeSam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York.Published inWhat Is a Brokerage Account? Where and How to Open OneBy Arielle O'Shea, Pamela de la FuenteBest Brokerage Accounts for Online Investing and Stock Trading in 2026By Chris DavisBest Investments: Where to Invest in 2026By Chris DavisThe Best-Performing Stocks in 2026 (By One-Year Returns)By Arielle O'Shea, Chris DavisInvesting in Dividend Stocks: 7 Highest Yields, Guide and CalculatorBy Chris Davis, Sam Taube
