- Large Caps: Companies with value above R$ 10 billion, such as Petrobras (R$ 485 billion), Vale (R$ 345 billion), and Itaú Unibanco (R$ 280 billion). They represent 72% of the Ibovespa and offer an average daily volume exceeding R$ 500 million, allowing entries and exits without significant impact on the price.
- Mid Caps: Companies between R$ 2 billion and R$ 10 billion, such as Marfrig (R$ 8.2 billion), Dexco (R$ 4.5 billion), and CVC (R$ 3.1 billion). They combine financial solidity with above-average growth potential, having registered an average appreciation of 65% in the last three years, superior to the 42% of large caps.
- Small Caps: Companies between R$ 300 million and R$ 2 billion, such as Vittia (R$ 1.7 billion), Dotz (R$ 890 million), and Desktop (R$ 450 million). They offer capital multiplication potential — 23% of Brazilian small caps doubled in value in the last 24 months — but with 40% higher volatility than the market average.
- Micro Caps: Companies below R$ 300 million, often trading less than R$ 1 million per day on B3. They represent the riskiest segment, with an average spread (difference between buy and sell) of 2.5%, more than five times higher than large caps.
Mastering the various types of stocks is essential to build solid wealth in the Brazilian market. This handbook analyzes in detail the characteristics, advantages, and risks of each category, providing practical tools for you to make more profitable financial decisions in Brazil's current economic scenario.
What are stocks and why they are fundamental in the Brazilian investment scenario
Stocks are fractions of a company’s social capital that transform their holders into business partners, with the right to part of the profits and results. In Brazil, the stock market has evolved significantly in the last decade, with B3 (Brasil, Bolsa, Balcão) reaching more than 5 million individual investors in 2024, a 400% growth since 2019.
The types of stocks differ by specific characteristics that directly impact their rights and return potential. In the Brazilian context, with its historically high Selic rate (currently at 10.5%), each type of stock offers distinct advantages for different investor profiles. The Pocket Option platform provides exclusive tools to analyze these different types with metrics adapted to the Brazilian reality.
Before exploring the different types of stocks on the exchange, it is crucial to understand that the Brazilian market has unique characteristics. For example, while common shares predominate in the US, Brazil has developed a hybrid system where preferred shares have a strong presence, representing about 40% of the value traded on B3. With the creation of the Novo Mercado in 2000 and its expansion in recent years, the country initiated an important transformation in its shareholder structure.
Fundamental classification: Common vs. preferred shares in the Brazilian market
The most basic distinction between types of stocks in the Brazilian market is between common and preferred shares — a division that defines not only political rights but also the potential return and risk profile of your investment.
| Characteristic | Common Shares (ON) | Preferred Shares (PN) |
|---|---|---|
| B3 Code | End with 3 (ex: PETR3) | End with 4 (ex: PETR4) |
| Voting right | Yes | Generally no |
| Preference in dividends | No | Yes (minimum 25% higher than ON) |
| Priority in case of liquidation | After preferred | Before common |
| Liquidity in the Brazilian market | Increasing since 2020 | Historically higher (40% of volume) |
Common shares (ON) guarantee voting power in company meetings, allowing influence on crucial decisions such as dividend distribution, mergers and acquisitions, and election of the administrative board. For investors who plan to buy significant stakes or who believe in the importance of active governance, this type of stocks offers strategic value that goes beyond immediate financial gains.
Preferred shares (PN) compensate for the absence of voting rights with tangible economic benefits: dividends at least 25% higher than ONs (according to Corporation Law 6.404/76) and priority in receiving these values. In the Brazilian market, where dividends are exempt from income tax for individuals, PNs often present dividend yields between 7-10% per year, making this type of stocks to invest in particularly attractive in scenarios of falling Selic rate.
Particularities of the Brazilian market that every investor should know
A unique characteristic of Brazil is the existence of multiple classes of preferred shares, identified by letters after number 4. For example, Petrobras has PETR4 (PN class A), while Vale once had VALE5 (PN class C). Each class has specific rights detailed in the company’s bylaws, which may include differentiated dividends or rights in special situations such as mergers. Pocket Option offers free access to all bylaws of these companies, allowing detailed comparisons of the advantages of each class.
Another vital aspect is the transformation brought about by B3’s Novo Mercado, which requires that companies listed in this segment issue exclusively common shares. This has already significantly altered the panorama of types of stocks on the exchange in Brazil, with 142 companies (representing 64% of B3’s market value) adhering to this model by 2024. For investors, this means greater transparency and protection, with 100% tag along for all shareholders.
Types of stocks by return profile: Value vs. Growth in the Brazilian context
Beyond legal classification, types of stocks can be categorized by their market behavior and return characteristics — essential knowledge to align your investments with your financial goals.
Crucial differences between value and growth stocks in Brazil
This classification, extensively used by Pocket Option analysts and other Brazilian market specialists, separates stocks according to how they generate returns for the investor.
| Characteristic | Value Stocks | Growth Stocks |
|---|---|---|
| Company profile | Mature and consolidated companies | Companies in expansion phase |
| Average dividend yield in Brazil | 6-12% per year | 0-3% per year |
| Average annual appreciation (5 years) | 8-15% | 20-40% (with higher volatility) |
| Typical multiples in Brazil | P/E 5-10, P/B 1-2 | P/E 20-50, P/B 4-10 |
| Examples in Brazil | Taesa (TAEE11, DY 9.2%), Itaúsa (ITSA4, DY 7.5%) | Locaweb (LWSA3), Méliuz (CASH3) |
In the Brazilian market, value stocks have gained popularity due to the tradition of robust dividend distribution, especially attractive in a country where the savings rate yields only 70% of Selic (currently about 7.35% per year). Companies like Taesa (TAEE11) have consistently distributed dividend yields above 9% in the last five years, while Engie Brasil (EGIE3) maintained payments between 8-10% even during the Covid-19 pandemic, demonstrating the resilience of this type of stocks to invest in.
On the other hand, growth stocks have been gaining significant space with the accelerated digitalization of Brazil — a country that has the fourth largest smartphone market in the world, with 242 million active devices in 2024. Companies like Totvs (TOTS3), the main business software developer in the country, registered an average annual revenue growth of 22% between 2020-2024, reflected in an appreciation of more than 150% of their stocks in the same period.
Types of stocks by size: How capitalization impacts your investment
The size of the company, measured by market capitalization, defines important characteristics such as liquidity, volatility, and appreciation potential. In the Brazilian context, where only 3% of the population invests in stocks (versus 55% in the US), understanding these size differences is crucial for defining your strategy.
Pocket Option has developed a proprietary algorithm that automatically classifies Brazilian stocks according to their capitalization and liquidity, adjusting the parameters quarterly to reflect changes in the market. This tool allows identification of, for example, companies that have just migrated from small to mid caps — a historically favorable time for investment, with an average appreciation of 28% in the 12 months following reclassification.
A peculiar characteristic of the Brazilian market is the significant discount of small caps in relation to their book value. While in the US these companies trade, on average, at 2.4x their book value, in Brazil this multiple is only 1.3x, creating opportunities for investors willing to research companies less covered by large investment banks (which concentrate 85% of their analyses on the 50 largest companies).
Types of stocks by sectors: Sectoral strategies adapted to the Brazilian economy
Sectoral classification allows strategic diversification and leveraging specific trends in the Brazilian economy, a country that has the largest agribusiness in the world, the greatest biodiversity on the planet, and significant reserves of oil and minerals.
| Sector | Specific characteristics in Brazil | Representative companies |
|---|---|---|
| Financial | High concentration (5 banks hold 80% of assets), spreads among the highest in the world (average of 32%) | Itaú (ITUB4, ROE 21%), Bradesco (BBDC4), B3 (B3SA3) |
| Basic Materials | Global competitiveness, production costs among the lowest in the world, exposure to the Chinese yuan | Vale (VALE3, largest iron ore producer in the world), Suzano (SUZB3, lowest pulp production cost) |
| Energy | Predominantly renewable matrix (83%), regulated tariffs with annual adjustments linked to inflation | Petrobras (PETR4, extraction cost of US$5.2/barrel), Eletrobras (ELET3), Engie (EGIE3) |
| Consumer | Internal market of 214 million people, young population (33% below 24 years), accelerated digitalization | Ambev (ABEV3, 62% of the beer market), Renner (LREN3, 16% annual digital growth) |
| Technology | Expanding ecosystem, 20 unicorns since 2018, e-commerce penetration of 14.4% (vs. 5.1% in 2019) | Totvs (TOTS3, leader in ERP with 50% of the market), Locaweb (LWSA3, growth of 38% p.a.) |
A peculiarity of the Brazilian market is the sectoral concentration in the Ibovespa, where commodities and banks represent 58% of the index — much higher than the 23% that these sectors occupy in the American S&P 500. For investors concerned with diversification, Pocket Option has developed a “sectoral concentration” indicator that alerts when your portfolio presents excessive exposure to a single sector (above 25%).
Some Brazilian sectors present unique dynamics that require specialized analysis. The electric sector, for example, has more pronounced defensive characteristics than its international equivalents, with long-term contracts (20-30 years) adjusted for inflation, resulting in average dividend yields of 8.7% — almost double the 4.5% paid by American utilities. On the other hand, the Brazilian retail sector is significantly more sensitive to the Selic rate, with an average drop of 12% in stock value for each percentage point increase in the basic rate.
Special types of stocks in the Brazilian market: Unique opportunities for diversification
In addition to traditional classifications, Brazil has developed specific instruments that expand investment possibilities and that every investor should know.
BDRs: Access to the global market from Brazil
BDRs (Brazilian Depositary Receipts) represent shares of foreign companies traded on B3, allowing international exposure without the need to open an account abroad or deal with complex income tax declarations (such as IRPF Carnê-Leão).
| Level | Specific characteristics | Accessibility and examples |
|---|---|---|
| BDR Level I | Lower informational requirement, represents 92% of BDRs available on B3 | Accessible to all investors since Oct/2020. Ex: AAPL34 (Apple), MSFT34 (Microsoft) |
| BDR Level II | Complete registration with CVM, statements adapted to Brazilian standards | All investors, only 6 companies currently available |
| BDR Level III | Allows raising funds in Brazil, greater commitment to local market | All investors, only 2 companies adhered by 2024 |
Since the release of BDRs for non-qualified investors in October 2020, this market has grown 580%, reaching R$ 25.6 billion in volume traded in 2023. Pocket Option offers detailed comparisons between investing directly in international stocks vs. BDRs, considering factors such as spread, exchange costs, and Brazil-specific taxes.
It is important to highlight that BDRs expose the investor to exchange rate variation, a factor of risk and opportunity. Historically, the real has devalued on average 6.8% per year against the dollar in the last 10 years, amplifying the returns of BDRs when measured in reais. For example, while Apple appreciated 491% in the US between 2018-2023, its BDR (AAPL34) rose 688% in the same period due to the exchange rate effect.
Types of stocks by governance: The impact of B3’s special segments
B3 has established differentiated listing segments that establish progressive standards of corporate governance — a factor that has been proven to influence the long-term performance of types of stocks to invest in.
- Novo Mercado: The highest standard, requires 100% ON shares, minimum free float of 25%, board of directors with at least 2 independent members (or 20%), 100% tag along for all shareholders, and disclosure of financial information in English. Companies like WEG, Raia Drogasil, and Magazine Luiza adopt this model.
- Level 2: Allows PN shares, but gives them voting rights in critical situations such as mergers and acquisitions. Requires 100% tag along for all shareholders and unified term of up to 2 years for the board. Banco ABC, Alupar, and Marcopolo are examples in this segment.
- Level 1: Focuses on transparency and shareholder dispersion, with obligations of minimum free float of 25% and detailed disclosure of transactions with related parties. Bradesco, Gerdau, and Oi are in this segment.
- Bovespa Mais: Created for small and medium companies that wish to access the market gradually, with a period of up to 7 years to reach the minimum free float. Nutriplant and Altus are examples.
- Traditional: Follows only the minimum requirements of the Corporation Law, without additional commitments. Petrobras, Eletrobras, and Cemig are examples of large companies that remain in this segment.
Research conducted by Pocket Option in partnership with economists from FGV demonstrated that, between 2015 and 2023, Novo Mercado companies consistently outperformed those in the traditional segment, with an average return higher by 7.3% per year and 22% lower volatility. This superior performance intensifies in periods of crisis — during the Covid-19 pandemic, Novo Mercado companies fell on average 27%, compared to 41% for companies in the traditional segment.
For Brazilian investors concerned with asset security, prioritizing companies from the highest governance segments represents an effective risk mitigation strategy, especially considering recent scandals such as those of Americanas and IRB Brasil, which resulted in losses exceeding 90% for shareholders in a matter of days.
Objective criteria for selecting the best types of stocks for your reality
With more than 400 companies listed on B3 among the different what are the types of stocks, the investor needs to establish clear and objective criteria to filter the best opportunities according to their profile and objectives. Pocket Option has developed its own methodology based on quantitative and qualitative factors:
| Criterion | Objective questions for self-assessment | Impact on stock selection |
|---|---|---|
| Time horizon | Do I need the resources in less than 2 years? Between 2-5 years? More than 5 years? | Short horizons favor blue chips; long horizons allow small caps (which require time to realize their potential) |
| Need for current income | What percentage of the investment do I need to receive annually in dividends? | Needs above 5% direct to utilities, banks, and telecommunications |
| Volatility tolerance | What maximum temporary loss would be bearable without selling (10%, 20%, 30%)? | Low tolerance favors stocks from defensive sectors with beta below 0.8 |
| Sectoral knowledge | In which sectors do you have professional or academic experience? | Sectoral familiarity allows identifying competitive advantages not priced by the market |
| Available capital | What initial value and monthly contributions do you intend to make? | Smaller values (up to R$1,000/month) work better with ETFs; larger values allow diversified portfolios with 10-15 stocks |
In the Brazilian context, with its history of exchange rate instability (the real has devalued more than 130% against the dollar in the last decade), evaluating the exchange exposure of companies is particularly important. Exporters such as Vale, JBS, and Suzano, which earn in dollars but have a large part of their costs in reais, have already demonstrated average appreciation capacity of 22% during periods of devaluation of the real above 10%.
Diversification among different what are the types of stocks on the exchange in Brazil should consider not only traditional sectors but also specific factors such as: exposure to different regions of the country (Southeast vs. Northeast, where GDP growth was 1.8% higher in the last 3 years), sensitivity to political cycles (regulated vs. free companies), and degree of protection against inflation (companies with demonstrated pricing power, capable of passing on cost increases).
Specific methodologies for analyzing each type of stock in the Brazilian market
Each type of stocks demands specific analytical methodologies, adapted to their particular characteristics and the Brazilian economic context.
| Type of Analysis | Relevant indicators in the Brazilian context | Practical application |
|---|---|---|
| Fundamental Analysis for Value | P/E adjusted to CDI, P/B compared to ROE, Dividend Yield vs. Selic rate, Net Debt/EBITDA in sectoral perspective | Identify companies like Itaúsa (ITSA4) trading with P/B of 1.4x while generating ROE of 16.5% – 30% discount compared to historical average |
| Growth Analysis | TAM (Total Addressable Market) in Brazil, current vs. potential penetration, local competitive advantages, current vs. projected EV/EBITDA | Evaluate companies like Locaweb (LWSA3) considering their expansion potential in the Brazilian hosting and digital services market, which grows 23% per year |
| Adapted Technical Analysis | Volumes adjusted to Brazilian average liquidity, supports/resistances at B3 points of interest, specific moving averages (17 and 34 periods) | Consider particularities such as the “foreign flow” effect, responsible for 46% of the volume on B3 and which has distinct behavior from the local investor |
| Quantitative Analysis for Brazil | Beta in relation to Ibovespa, correlation with exchange rate and Selic rate, volatility in electoral periods, resilience in local crises | Build resilient portfolios to Brazil-specific risk factors, such as protests, strikes, and sectoral regulatory changes |
Pocket Option has developed proprietary models that consider the peculiarities of the Brazilian market. For example, its “Selic sensitivity” index quantifies the historical impact of changes in the basic rate on different sectors and companies, allowing preventive adjustments in the portfolio before COPOM meetings.
For Brazilian technology companies, specific metrics such as CAC (Customer Acquisition Cost) in relation to LTV (Lifetime Value of the Customer) gain special relevance due to the higher cost of capital in Brazil. A practical rule is that, in the Brazilian market, the LTV/CAC ratio must be at least 4:1 to justify an aggressive growth model, while in the US 3:1 is already considered sufficient.
A unique characteristic of the Brazilian market is the need to adjust all multiples to CDI/Selic. For example, while a P/E of 15 may be considered “cheap” in the US with interest rates at 3%, in Brazil, with Selic at 10.5%, the same P/E would represent a significantly more expensive valuation. Pocket Option uses the CAPM model adapted to Brazil, incorporating the current country risk of 2.53% (JP Morgan EMBI+) in its analyses.
Practical strategies for different types of stocks in the Brazilian market
Each category of stocks responds better to specific strategies, especially when adapted to the tax, regulatory, and economic particularities of Brazil.
Optimized strategy for dividend stocks in Brazil
Brazil offers a unique tax advantage for investors in dividend-paying stocks: total income tax exemption on these earnings, while capital gains are taxed at 15% (or 20% for day trade operations). This tax asymmetry makes this strategy particularly efficient:
- Select companies with minimum dividend yield of 6% per year and sustainable payout ratio (below 80% for cyclical sectors, up to 95% for utilities with regulated revenues)
- Prioritize companies with a history of at least 5 consecutive years of growing or stable payments, such as Taesa which has increased its dividends by an average of 8.2% per year since 2018
- Diversify between sectors with different payment seasonalities: banks (February/August), electric companies (May/November), insurers (March/September)
- Consider the Brazilian “dividend arbitrage”: buying stocks before the ex-dividend period and selling them after payment, a strategy that generated an average return of 3.2% above CDI in the last 24 months
Pocket Option has developed a “Dividend Calendar” that alerts about critical dates (last day with rights, effective payment) and automatically calculates the net dividend yield considering specific aspects such as JCP (Interest on Own Capital), a common form of distribution in Brazil that suffers 15% withholding at source, but generates tax benefit for the paying company.
In the Brazilian market, holding companies like Itaúsa (ITSA4) and Bradespar (BRAP4) often trade with “holding discount” — difference between market value and the sum of their participations — currently at 21.7% for Itaúsa, creating interesting opportunities for dividend-focused investors. These holdings function as “concentrators” of dividends from various companies, simplifying management for the individual investor.
Conclusion: How to build a balanced portfolio with different types of stocks in Brazil
Mastering the various types of stocks available in the Brazilian market is just the first step to building consistent wealth. The real differential lies in the ability to strategically combine these different types in a personalized portfolio that balances current income and appreciation potential.
In the Brazilian market, characterized by shorter and more pronounced economic cycles (average of 3.2 years vs. 5.7 years in the US), intelligent diversification among the different types of stocks on the exchange becomes even more crucial. An effective model for Brazilian investors is the “core-satellite” approach, where 60-70% of the portfolio is allocated to stocks of consolidated companies from the Novo Mercado and Level 2 segments, complemented by smaller positions (5-10% each) in promising small caps and selected BDRs.
Pocket Option recommends that Brazilian investors maintain discipline even in the face of inevitable volatilities in the local market. Historical data shows that investors who made consistent monthly contributions to the Ibovespa during the last 15 years, even going through crises such as 2008, presidential impeachment, and pandemic, obtained an average annual return of 14.2%, significantly higher than the accumulated CDI in the period.
Remember that, regardless of the types of stocks to invest in that you choose, success in investments in the Brazilian market requires constant adaptation to economic, regulatory, and tax changes. The differential is not just in selecting the best stocks, but in building a strategy consistent with your financial goals and continuously adjusting it to the realities of the dynamic Brazilian market.
FAQ
What are the safest types of stocks for beginner investors in Brazil?
For beginners in the Brazilian market, the safest stocks are Novo Mercado blue chips, especially from defensive sectors. Companies like WEG (WEGE3), with consistent growth of 18% per year in the last decade, Ambev (ABEV3), which maintained operating margins above 30% even during recessions, and Itaú Unibanco (ITUB4), with conservative provisions and ROE above 20%, combine financial strength, exemplary governance, and high liquidity (daily volume exceeding R$200 million), allowing entries and exits without impacting the price.
What are the main differences between investing in common and preferred shares in Brazil?
In Brazil, common shares (ON) guarantee voting rights at shareholders' meetings and direct participation in corporate decisions, including the power to elect members of the administrative board. Preferred shares (PN), on the other hand, give up this political right in exchange for concrete economic advantages: dividends at least 25% higher than those of ONs (according to Law 6.404/76) and priority in receiving these values. Historically, Brazilian PNs had greater liquidity, with volume 35% higher than ONs until 2015, but this trend has reversed with the expansion of Novo Mercado, which already represents 64% of B3's value and requires exclusively ON shares.
How are stock dividends taxed in Brazil?
Dividends in Brazil are completely exempt from Income Tax for individuals, regardless of the amount or frequency of distribution -- a significant tax advantage compared to capital gains, which are taxed at a rate of 15% (or 20% for day trading). This benefit applies to both traditional dividends and Interest on Own Capital (JSCPs), although the latter are subject to a 15% withholding tax. This privileged tax treatment explains why the average dividend yield of Brazilian companies (5.8%) is significantly higher than markets such as the US (1.7%) and Europe (3.2%).
Why do some Brazilian stocks have codes ending in 3, 4, or 11?
In the B3 system, the final numbers of the trading codes identify the specific type of security: codes ending in 3 (such as VALE3) represent common shares (ON), with voting rights; those ending in 4 (such as PETR4) are preferred shares (PN), usually without voting rights but with economic advantages; while those ending in 11 (such as TAEE11 or SANB11) indicate units -- packages that combine different types of shares from the same company, often 1 ON + 2 PNs, offering the investor balanced exposure to both political and economic rights simultaneously.
What is the difference between investing in stocks directly and through funds or ETFs in the Brazilian market?
Investing directly in stocks in Brazil provides total control over company selection, operation timing, and efficient tax planning (such as using losses to offset gains), as well as exemption from dividend tax. On the other hand, Brazilian stock funds and ETFs offer instant diversification with investments starting at R$100 and professional management, but charge management fees (average of 1.8% per year for active funds and 0.5% for ETFs) and have less favorable tax treatment, with a standard rate of 15% on income regardless of origin (capital gain or dividends) and a regressive table starting at 22.5% for redemptions before 180 days.