The term "widow-and-orphan stock" is used to describe a stock with low risk and generous dividends. The name stemmed from the concept that this type of security was ideal for widows and orphans because it could keep their capital relatively safe while providing them with a reliable income.

This type of stock is the stock of a well-established company that is a leader in its market.

When the term was first coined, it was frequently applied to railroads and utility company stock. Telephone service provider AT&T was considered by many to be the quintessential widow-and-orphan stock from the 1930s until the 1980s, when the company was deemed a monopoly and broken apart. Because of little competition and high demand for telephone service, even during an economic downturn, investors could expect the firm's stock to pay dividends when less stable securities were performing poorly. Later, strong conglomerates were added to the widow-and-orphan category.

While a widow-and-orphan stock's low price fluctuation minimizes the risk of losses, it can also mean lower gains. For this reason, widow-and-orphan stocks tend to be popular during bear markets, when investors shy away from taking risks, but can be overlooked during bull markets, when many investors are attracted to riskier stocks in the hope of reaping higher profits.

Due to industry changes, like deregulation and increased competition, today's utility companies are not as stable as they once were, and many are no longer considered widow-and-orphan stocks. In fact, some question whether any company is safe enough today to be a true widow-and-orphan stock. Please refer to this Market Watch article for more on this topic.