Do growth stocks pay dividends?

Most growth stocks don't pay dividends. Instead, they use excess capital to invest in the continued growth of the business. However, as companies grow larger and generate substantial free cash flow, some can continue investing in growth while returning some capital to shareholders through dividends.

What growth stock is going to boom in 2026?

The stock market prices future expectations for each company into its stock price. If a company exceeds expectations, its stock price is likely to increase. So, the stocks expected to rise the most in 2026 are those that outperform market expectations.

What is an example of a growth stock?

One example of a growth stock is Amazon. Its shares are usually considered expensive by traditional valuation measures, such as price-to-earnings (P/E) or price-to-sales (P/S) ratios. However, the company continues to invest in growing its business and expanding into new markets and industries. The long-term potential profit remains extremely high.

What are the best stocks for growth?

The best stocks for growth are usually smaller companies with unique competitive advantages in large or potentially large addressable markets. They are typically expensive relative to their peers, but the company's upside justifies the stock price.

What is the difference between a growth stock and a value stock?

Growth stocks tend to exhibit faster, less predictable revenue growth than value stocks, which are much more predictable from year to year. Over the long run, growth stocks are expected to grow revenue and earnings much faster than value stocks. Also, growth stocks may trade on momentum, as well as on how their financial results and management outlooks compare to expectations. Value stocks, on the other hand, typically trade based on their valuation.

Are growth stocks suitable for long-term or short-term investors?

Growth stocks are best suited for investors with a long time horizon. They're inherently more volatile than value stocks, which means investors need to be able to weather the ups and downs of growth stocks for their investment thesis to play out.

How long should you hold growth stocks?

Growth stocks perform best over the long run -- years, not months. It can take a long time for an investment thesis to play out, so it's best to be able to hold the stock until it does or your investment thesis is no longer accurate.

Are growth ETFs a good alternative to individual stocks?

If you don't have the time or inclination to research individual stocks, a growth ETF can provide greater exposure to growth stocks than a standard index fund. The potential returns of a growth ETF might not be as high as sifting through and finding the best opportunities among growth stocks for yourself, but the time saved maintaining your own portfolio can be worth it.

Are growth stocks a good investment during economic uncertainty?

Growth stocks can still be a good investment amid economic uncertainty. However, they can see their share prices dip significantly as investors tend to avoid the riskiest investments when they're uncertain about the immediate future. If you buy a growth stock of a company with a solid balance sheet and an excellent long-term outlook in the midst of economic uncertainty, it could pay off handsomely in the long run.

Best Growth Stocks to Buy in 2026

By Adam Levy – Updated Apr 8, 2026 at 11:38 AM EST | Fact-checked by Parker Hicks

Key Points

Growth stocks can yield high returns but face significant price volatility due to high future earnings expectations.
Investing early in companies driving prominent market trends like AI and e-commerce can maximize profits.
Diversify growth stock investments across industries and trends to manage risk and enhance returns.

Investing in growth stocks can be a powerful way to build long-term wealth -- but it’s not always a smooth ride. Growth stocks tend to outperform when the market rewards future potential, but they can fall hard when investors grow more cautious.

The upside is real. So is the volatility. The goal is to invest in growth companies that can keep compounding through good markets and bad, and to build a strategy that helps you stick with them.

What is a growth stock?

A growth stock is a company expected to increase revenue and earnings faster than the broader market (or faster than most peers). Many growth companies win by doing at least one of the following:

Taking a share of a large existing market.
Expanding into new markets.
Creating a new product category altogether.

Because investors are paying for future potential, growth stocks often trade at higher valuations than the average stock. That doesn’t mean they’re “overpriced,” but it does mean expectations are high, and the stock can drop quickly if growth slows.

Why they can be volatile: Growth stocks are especially sensitive to interest rates and inflation because a larger share of their value is tied to earnings expected years in the future. That’s why downturns can hit them harder.

Top growth stocks to consider

Ticker Information Table
Company name	Company ticker	Market cap	Industry
Meta Platforms	NASDAQ:META	$1.5 trillion	Interactive Media and Services
Shopify	NASDAQ:SHOP	$152.7 billion	IT Services
Uber Technologies	NYSE:UBER	$147.6 billion	Road and Rail
Block	NYSE:XYZ	$35.9 billion	Diversified Financial Services
MercadoLibre	NASDAQ:MELI	$88.3 billion	Multiline Retail
Nvidia	NASDAQ:NVDA	$4.3 trillion	Semiconductors and Semiconductor Equipment
Netflix	NASDAQ:NFLX	$417.2 billion	Entertainment
Amazon	NASDAQ:AMZN	$2.3 trillion	Multiline Retail
Salesforce	NYSE:CRM	$168.9 billion	Software
Alphabet	NASDAQ:GOOG	$3.7 trillion	Interactive Media and Services

Data as of Apr 8, 2026. Showing 10 of 10 tickers.

As this list shows, growth stocks come in all shapes and sizes. They can be found in a variety of industries, both within the U.S. and in international markets. Although all the stocks on this list are from larger businesses, smaller companies can also be fertile ground for growth investors.

A great way to invest in a wide variety of small-cap growth stocks is via an exchange-traded fund (ETF), such as Vanguard Small-Cap Growth Index Fund ETF (VBK +3.05%). This fund tracks the performance of the CRSP U.S. Small Cap Growth index, providing investors with an easy way to invest in roughly 560 small-cap growth companies at once.

The Vanguard Small-Cap Growth Index Fund ETF has an ultra-low expense ratio of 0.05%. This means investors will receive almost all the fund's returns, with only a small amount in fees going to Vanguard. (An annual expense ratio of 0.05% works out to only $0.50 in fees per $1,000 invested annually.)

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How to find growth stocks

To find great growth stocks, you'll need to:

Identify powerful long-term market trends and the companies best positioned to profit from them.
Narrow your list to businesses with strong competitive advantages.
Further narrow your list to companies with large addressable markets.

An infographic listing criteria for how to find the best growth stocks and companies on the market. — Image source: The Motley Fool.

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Streaming entertainment

Millions are canceling their cable subscriptions and replacing them with less expensive and more convenient ones streaming options. As the global leader in streaming entertainment, Netflix offers a great way to profit from this trend, but it faces growing competition from other media companies such as Disney (DIS +3.55%)

Electric and autonomous vehicles

The world is shifting from reliance on gasoline to electricity for vehicle power. According to a survey of industry executives, half of all auto sales could be electric vehicles (EVs) by 2030.

Tesla (TSLA -1.08%) has been the leader in the space, with its lineup of vehicles and battery technology. The Chinese company BYD (BYDDY +3.19%) has ascended rapidly to become the world's leading EV maker, thanks to its low-priced vehicles. Both EV makers have also made significant progress in developing self-driving technology for their cars.

However, Alphabet's Waymo has a clear lead in the space, offering a commercial service in several U.S. cities and completing more than 400,000 rides per week. Uber (UBER +0.91%) has emerged as a key partner for autonomous vehicle companies looking to deploy their fleet and maximize their capital utilization. It could be a hidden beneficiary of the growing number of self-driving cars on the road.

Artificial intelligence

Companies have recently poured billions into accelerating their AI development and applying it to their businesses. Nvidia (NVDA +2.06%) has been a major beneficiary, as it designs the chips used to train many large language models, the foundation of generative AI.

Alphabet, Amazon, Microsoft (MSFT +0.48%), and Oracle (ORCL +0.34%) also benefit from growth in AI applications since many run on their cloud computing platforms. Salesforce is leveraging its position in enterprise software to help companies use their own data to create AI-powered agents.

The key is to invest in these trends and companies as early as possible. The earlier you get in, the more you stand to profit. However, the most powerful trends can last for many years -- even decades -- giving you plenty of time to claim your share of the profits they create.

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Prioritize companies with competitive advantages

It's also important to invest in growth companies that possess strong competitive advantages. Otherwise, their competitors may pass them, and their growth may not last long. A strong competitive advantage will help companies survive and thrive through market downturns, while those without one will struggle.

If you can identify stocks of companies with strong competitive advantages being sold off along with the rest of the market, it can be an opportunity to generate massive returns as they recover. Some competitive advantages are:

Network effects: Meta's Instagram is a prime example here. Each person who joins the social media platform makes it more valuable to other members. Network effects can make it difficult for new entrants to displace the current market share leader. Meta's 3.5 billion users across its family of apps certainly make it unlikely that a new social media company will displace it.
Scale advantages: Size can be another powerful advantage. Amazon is a great example in this category because smaller rivals will find it extremely difficult to replicate its massive global fulfillment network.
High switching costs: Switching costs are the expenses and difficulties associated with switching to a rival's product or service. Shopify, an online retail platform used by more than 1 million businesses, is a perfect example of a business with high switching costs. Once a company begins using Shopify as the core of its online operations, it's unlikely to go through the hassle of switching to a competitor.

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Growth stocks versus dividend stocks.
Growth Stocks	Dividend Stocks
Fast-growing young companies in evolving industries.	Slow-growing mature businesses in stable industries.
Reinvest profits in expanding the business and growing market share.	Pay out a large portion of profits as dividends for shareholders.
May produce little or negative free cash flow as management invests in the business.	Steady and predictable growth in free cash flow over time.
Higher volatility.	Lower volatility.
The biggest risk is management's execution on the long-term outlook.	The biggest risk stems from mismanaging capital allocation, leading to a dividend cut.
Typically trade for high valuations.	Typically trade for low valuations.

Investors can generate great returns from either type of stock. Understanding what to look for when investing in growth stocks or dividend stocks is key to getting the most from either strategy.

How to manage a portfolio of growth stocks

Not every growth stock you buy will pan out. As such, it's best to start with small positions in multiple growth stocks. If a business's financial performance lines up with your investment thesis, you might increase your position in that stock, as you should now have more confidence in its future growth. However, if you start to see evidence that your thesis was wrong, you should start trimming your position, or possibly exit it altogether.

As mentioned, growth trends can last a very long time, so you should avoid selling a stock too early. However, since growth stocks are more volatile than value stocks, it may be smart to limit your biggest positions to a certain percentage of your portfolio. That way, a big swing in the stock price won't crater your whole portfolio.

FAQ

FAQ: Growth stocks

Expert Q&A on growth stocks

About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Adam Levy has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Netflix, Salesforce, and Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Block, Etsy, MercadoLibre, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, PayPal, Salesforce, Shopify, Tesla, Uber Technologies, and Vanguard Index Funds - Vanguard Small-Cap Growth ETF. The Motley Fool recommends BYD Company and Gartner and recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.

Best Growth Stocks to Buy in 2026

Key Points

What is a growth stock?

Top growth stocks to consider