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A widow-and-orphan stock is a low risk stock that pays a consistently high dividend and has less volatility than the overall stock market. A widow-and-orphan stock provides a safe haven from market risk and maintains dividend payments through good and bad economic times. The term widow-and-orphan stock originated in the 1930s and refers to their suitability as an investment for widows and orphans. A typical widow-and-orphan stock is a share of a mature, well known company with a leading market share in a noncyclical industry. A classic example of a widow-and-orphan stock is any of the public utilities prior to industry deregulation. These stocks fit the criteria of a widow-and-orphan stock because of their monopoly positions and high dividend yields.
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