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For years, small-cap stocks weren't associated with dividends, let alone quality, rising payouts. But that narrative is changing for the better. However, investors need to be judicious about the ETFs they deploy to access that theme.

Large-cap stocks tend to be companies that are established in their markets with long-term histories. Some feel this makes them “safer” to invest in. Larger company stocks also often pay dividends, allowing you to capture some of the return of your investment, which some investors view as a benefit.

What's the Difference Between Large-Cap Stocks and Small-Cap Stocks? Large-Cap StocksSmall-Cap StocksTypically viewed as more stableTypically viewed as more volatileLess potential for significant growthMore potential for explosive growthMore likely to pay dividendsLess likely to pay dividends1 more row • Nov 29, 2021

If you have a greater risk tolerance and longer time horizons, small-cap stocks tend to outperform big-caps over time because they are able to grow more rapidly than larger companies. If you prefer stable appreciation and dividend income, big-caps may be more suitable.

Difference Between Large-Cap, Medium-Cap and Small-Cap companies AspectLarge-Cap CompaniesSmall-Cap CompaniesMarket CapitalizationRs 20,000 crore or moreLess than Rs 5,000 croreVolatilityLow volatilityHigh volatilityGrowth PotentialLower growth potentialHigher growth potentialLiquidityHigh liquidityLeast liquidity1 more row • Dec 2, 2023

Aside from having a market capitalization of $10 billion or more, large-cap stocks also tend to be those of older, more mature corporations. These companies may be more likely to pay regular dividends to their shareholders because they see stable, established sources of income and profitability.

Small-cap stocks and large-cap stocks both come with their own pros and cons. While small-cap stocks can generate higher returns, they also have a higher risk profile. Conversely, large-cap stocks witness smaller growth but are more stable. Investors should consider investing in both for a balanced portfolio.