8
6 Types of Stocks You Should Know
You’re our first priority.
Every time.
NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.
We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
6 Types of Stocks You Should Know
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.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Updated · 2 min readHow is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
More on our editorial rigor
Head of Content, Investing & Taxes
19 years of experience Expertise Retirement planning investment management investment accountsArielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 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.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 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 Head of Content, Investing & Taxes + more + moreHead of Content, Investing & Taxes
19 years of experience Expertise Retirement planning investment management investment accountsArielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 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.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 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 Head of Content, Investing & Taxes + more + more
Lead Writer
9 years of experience Expertise Stocks ETFs economic newsSam 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.
Sam 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 in Lead Writer + more + more Nerdy takeawaysTwo major types of stocks are common stock and preferred stock. Common stock usually has voting rights.
Preferred stock is usually non-voting, but often pays higher dividends.
Stocks can also be classified by size, sector, location or investment style.
Some stocks are split into different classes (e.g. Class A vs. Class B) with different voting rights.
A 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.
A 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
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
Types of stock
Types of stock1. Common stock
1. Common stockIf 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.
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.
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
2. Preferred stockThe 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.
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.
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: » Learn more: How to make money investing in stocksCommon stock
Common stock
Common stockPreferred stock
Preferred stock
Preferred stockPros
ProsPotential for higher long-term return.
Potential for higher long-term return.Voting rights.
Voting rights.Dividends are typically higher, fixed and guaranteed.
Dividends are typically higher, fixed and guaranteed.Share price experiences less volatility.
Share price experiences less volatility.Preferred shareholders are more likely to recover at least part of investment in case of bankruptcy.
Preferred shareholders are more likely to recover at least part of investment in case of bankruptcy.Cons
ConsDividends, if available, are often lower, variable and not guaranteed.
Dividends, if available, are often lower, variable and not guaranteed.Stock price and dividend may experience more volatility.
Stock price and dividend may experience more volatility.More likely to lose investment if the company goes bankrupt.
More likely to lose investment if the company goes bankrupt.Lower long-term growth potential.
Lower long-term growth potential.No voting rights in most cases.
No voting rights in most cases.Best for
Best forInvestors looking for long-term growth.
Investors looking for long-term growth.Investors looking for income.
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:
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
3. Large-cap stocks, mid-cap stocks and small-cap stocksYou might’ve heard the words large-cap or mid-cap before; they refer to market capitalization, or the value of a company.
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).
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).4. Sector stocks
4. Sector stocksCompanies 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:
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:Energy
EnergyMaterials
MaterialsIndustrials
IndustrialsConsumer discretionary
Consumer discretionaryConsumer staples
Consumer staplesHealth care
Health careFinancials
FinancialsInformation technology
Information technologyCommunication
CommunicationUtilities
UtilitiesReal estate
Real 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.)
Stocks 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
5. Domestic and international stocksStocks are frequently grouped by geographic location.
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.)
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
6. Growth and value stocksYou 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.
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.
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
Types of stock classesCompanies 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.
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).
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
Choosing the right stocks for youAn 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.
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.
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.
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. Neither the author nor editor held positions in the aforementioned investments at the time of publication. About the authors Arielle O'Shea Arielle O'Shea Arielle is a NerdWallet authority on retirement and investing, with appearances on the "Today" Show, "NBC Nightly News" and other national media. See full bio. Sam Taube Sam Taube Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree in 2016. See full bio.Helpful resources
Helpful resources How to Invest in Stocks What Is the Average Stock Market Return? How to Make Money in Stocks in 2026: 6 Easy Steps How to sell stock: A 3-step guide for beginners More like this Investment Basics Investing Stocks Investment Calculator Use our free investment return calculator to estimate how your money can grow. Enter your planned contributions, timeline, rate of return and compounding frequency to get started. Chris Davis Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana The Best-Performing Stocks in 2026 (By One-Year Returns) These are the best 21 stocks in the S&P 500 right now, based on 1-year performance. 2 By Arielle O'Shea, Chris Davis Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube What Is a Brokerage Account? Where and How to Open One Opening a brokerage account is the first step to investing. You can open one in as little as 15 minutes, but you'll need to fund it and select investments to start building out your portfolio. 2 By Arielle O'Shea, Pamela de la Fuente Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Investment Calculator Use our free investment return calculator to estimate how your money can grow. Enter your planned contributions, timeline, rate of return and compounding frequency to get started. Chris Davis Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana The Best-Performing Stocks in 2026 (By One-Year Returns) These are the best 21 stocks in the S&P 500 right now, based on 1-year performance. 2 By Arielle O'Shea, Chris Davis Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube What Is a Brokerage Account? Where and How to Open One Opening a brokerage account is the first step to investing. You can open one in as little as 15 minutes, but you'll need to fund it and select investments to start building out your portfolio. 2 By Arielle O'Shea, Pamela de la Fuente Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Investment Calculator Use our free investment return calculator to estimate how your money can grow. Enter your planned contributions, timeline, rate of return and compounding frequency to get started. Chris Davis Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana The Best-Performing Stocks in 2026 (By One-Year Returns) These are the best 21 stocks in the S&P 500 right now, based on 1-year performance. 2 By Arielle O'Shea, Chris Davis Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube