Large-cap stocks are determined based on their market capitalization. While there is no hard and fast rule on what separates large-cap stocks from mid-cap or small-cap; to be considered a large-cap stock a company generally has a market capitalization of 10’s of billions of dollars.
Large-cap companies have an enormous amount of resources at their disposal and are likely to withstand economic downturns for longer periods of time relative to their smaller counterparts. For this reason, large-cap stocks are usually considered less risky investments and they provide a steadier income stream in terms of dividend payments. For low risk investors who are looking at income generation as a portfolio goal, an asset allocation that has a significant portion devoted to large-cap stocks is an option.
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