A U.S. Bancorp Piper Jaffray Investment Executive can discuss with you the risks and benefits of owning stocks and help you determine whether equities are suitable for your portfolio. Common stocks represent shares of ownership of a corporation. The value of these shares can rise or fall based on investor expectations of future earnings and dividends. The relationship of the market price to a company's actual or expected earnings, called the price-earnings ratio, is a measure of these expectations. Market values are also affected by forecasts of business activity in general and investor psychology based on the current business and economic environment.
Growth stocks offer the potential for significant capital appreciation.
Growth stocks may not pay dividends since earnings are generally reinvested to finance future growth. Stocks of established firms in mature industries and with histories of regular earnings and dividends tend to be characterized by relative price stability and lower price-earnings multiples. These companies reward investors by paying out a significant portion of their earnings to shareholders in the form of dividends. These stocks are often called income stocks. The Risks and Rewards Anything that can affect the fortunes of a company can affect its stock value and dividend payments.