An inside guide to large cap stocks

What are large cap stocks and how can you get involved with them? Large cap stocks are one of the most popular and highly traded stock companies.A large cap stock is one that has at least $5 billion capitalization. There is a minimum capitalization of $1 billion and it can continue to climb on up to $10 billion.

Right now there are about 30 companies that are included with the Dow Jones large cap stock funds. The standard and poor index has about 500 large cap stock companies right now.What type of companies below to the large cap stock accounts? Here are some that you can choose from:

• McDonalds


• Home Depot


• Nike


• Walmart


• Disney


• General Electric


• Apple


• Microsoft

Many of the large cap stocks are generally referred to as blue chip stocks. They are only referred to as blue chip because they are considered a highly valuable piece of stock. They have a history of growth and they will continue to grow into the future. Take a look at their earnings and dividend growth and you will be able to see that these large cap stocks have a high rate of return and a lot of promise for your investment account.

How can you get involved in large cap stock investing? Since the average investor doesn't have thousands of dollars to play around with and buy individual stocks, your best shot lies with mutual funds. When you invest your money into mutual funds, you have the option to take this small amount of money and pool it with hundreds of other investors and together you can buy the stock and share in the profits. This is a great way to expand your portfolio and to join the elusive blue chip club where you are playing with stock of some of most profitable and successful companies in the world.

The one thing you need to know about large cap stocks is that they are vulnerable to risk like any other stock. Just because Nike has been around for several years and has continued to perform well doesn't mean it will always be a success. Take a look at some of the companies that were once thought to be the best of the best like Enron and WorldCom. If investors learned anything, it was to learn more about the companies that they are buying into. Learn about the management structure along with the people that are running the company. Watch for their annual reports and review their finances. You need to be sure that you are investing in an honest company that has a strong future.

Large cap stocks are usually managed funds. This means that your mutual fund manager is responsible for picking the stock instead of buying up the stock of your choice. Remember that you are combined with several other individuals as you are investing in these accounts and you need to know that majority rules so you won't always get your way in buying the large cap stocks of your personal choice.

Look at the dividend history of the funds. This is a great way to find out how much you can expect to be paid as you can create an average of the dividend amounts and space it out over time to come up with your expected dividend amount. Some large cap stocks pay frequently while others only pay yearly. Always know which type of dividend payment you need, especially if you are relying on this money for other needs.

Speak to your financial advisor today as they can help you take a look at your investments and come up with a strategy that allows you to acquire more money and invest in large cap stocks.