Can You Make Money When a Stock Price Is Stable?

by Ron White

Stock market investment can provide a great source of short- or long-term income. Market conditions, however, have a significant effect on an investor’s success. But even in a slow economy investors can earn money on their investments. A key consideration involves knowing the types of stocks available and how each affects earning potential. Whether in a bull or bear market, stable stocks provide some unique characteristics for investors.

Stock Dividend Revenue

Stable stock prices do not provide the potential for significant profit that you can achieve with high-earning speculative stock investments. Stable stocks, however, also reduce risk to a minimum and provide a steady stream of dividend income - if the stock pays a dividend. This steady, reliable income from quarterly dividends offer significant money-making potential to the long-term investor. With stable stocks, investors rarely need to worry about the pitfalls that come with riskier investments. These stocks are a particularly advantageous option in an economic recession, when attractive growth stocks tend to be difficult to find.

Limited Growth

Because stock prices are tied to stock performance, stable prices also mean stable dividends. You should not expect 10 to 20 percent return on investment from most stable stocks, and you are unlikely to see stock split over a short period of time. Instead, you might need to settle for 4 to 8 percent return. This provides a sound income source, but it does not make it likely for you to gain substantial wealth over the short term.

Stability in an Unstable Market

In a recessionary market, finding stocks with price stability puts you in a safe position. You still have some potential for growth, but you do not run the risk of losing vast amounts of your investment. Stable stocks can allow you to protect your investment and give you the potential to make more money in the future. This kind of protection can be highly beneficial for investors who do not have the time to watch the market closely to conduct speculative stock trading.

Bottom Line

Stocks with stable pricing do not offer the chance to earn high rates of profit in short periods of time, but they do provide money-making opportunities for investors who seek steady income and gradual investment growth over the longer term. Any portfolio should include some stable stock investments, and it pays to move a greater percentage of stock investments in stable companies during a recessionary period.

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