What are stocks?

Common questions about stocks.

What are value and growth stocks?

Value and growth stocks are two different types of stock. Growth stocks are anticipated to grow at a rate above the average for the market. Value stocks are those that tend to trade at a lower price relative to their fundamentals. To determine whether a stock is underpriced, market analysts look at a company's fundamentals (such as dividends, earnings, and sales) relative to its current share price. Growth stocks tend to be more volatile investments and generally do not pay dividends.

What are stock dividends?

Stock dividends are a payment in the form of additional shares, instead of cash.

What is sector investing?

Sector investing is the strategy of investing across an entire sector (ex: technology, financial, consumer staples, etc.), typically using mutual funds or exchange-traded funds (ETFs).

What is a stock split?

A stock split is a type of corporate action that occurs when a company's board of directors decides to divide the company's outstanding shares into a larger or smaller number of shares. Splits are a change in the number of outstanding shares of a company's stock without a change in shareholders' ownership percentage in the company. For example, with a 2:1 split, a client will receive two shares for each share owned prior to and through the open on the security's split ex-dividend (or "effective") date. Also, the share price is adjusted so the value of ones holding in the split stock is unchanged, absent any price changes post-split.

How does Schwab route my stock orders?

We work hard to ensure your equity orders are routed to destinations that have provided high-quality executions over time. We seek out top-performing securities exchanges and liquidity providers and rigorously evaluate execution quality.

How can stocks fit into a long-term investing strategy?

People invest in stocks for different reasons—growing the value of their investable assets, profiting from short-term price moves, or earning income from dividends. Over time, owning stocks can help build wealth in a few key ways: When the value of a company grows, the value of its stock may increase, allowing investors to benefit from that appreciation. For investors who reinvest dividends, compounding can further accelerate portfolio growth—earnings generate additional earnings over time. Of course, remember that investing in stock offers no guarantee that you will make money and that it's possible to lose money and payment of stock dividends is not guaranteed. As with any investment, it helps to weigh the benefits and risks and consider how stocks might fit into your overall portfolio.

How can international investors access U.S. stock market opportunities?

International investors can access U.S. stock market opportunities by opening an eligible Schwab brokerage account that provides access to U.S. exchanges. Through these accounts, investors can trade U.S.-listed securities. Investors can also leverage Schwab's online tools and resources to identify, analyze, and monitor U.S. stocks.

How can investors gain exposure to international companies through U.S. markets?

Investors can gain exposure to international companies through U.S. markets by investing in Schwab's American Depositary Receipts (ADRs). ADRs are securities issued by U.S. banks that represent shares of non-U.S. companies and trade on U.S. exchanges in U.S. dollars. This allows investors to buy and sell shares of certain international companies through a U.S. brokerage account without trading directly on foreign exchanges. Learn more about ADRs.