What Does the Fifth Letter of a Stock Symbol Mean?

Stock symbols may seem like gibberish at times. There used to be a simple rule that companies on the New York Stock Exchange had one to three letter symbols that represented something about their business, while companies on the Nasdaq had four letter symbols. Today, companies are free to take their symbols with them when they change markets. What has remained stable, though, is the fifth letter or, on the NYSE, the letter after the dot. These extra letters have special meanings. Here are the most common letters you'll see.

Stocks with an F or a Y as their fifth letters are foreign companies. F stocks are truly foreign, while a Y indicates an American Depositary Receipt. ADRs are shares of stock traded on foreign exchanges that get bought by American investment banks for resale on American markets as ADRs.

Stocks with an X code are mutual funds. A mutual funds is a pool of stock in which you can buy shares. Buying mutual fund shares instead of traditional stock shares lets you get more diversification since you can buy small pieces of shares of many stocks by buying a share of a mutual fund.

Stocks with M, N, O or P after their name are shares of preferred stock, with P representing a first-class preferred issue, O a second class, N a third class and M the fourth class. Although preferred stock is a form of ownership, it doesn't have the voting rights of common stock. On the other hand, it usually offers a more-generous dividend that gets paid before common stock dividends. In many ways, preferred stock is as much like a corporate bond as it is a share of stock.

Stocks with E or Q after their ticker symbols should usually be avoided. An E means that the company has failed to meet an obligation set by the Securities and Exchange Commission, such as reporting earnings on time. Q stocks are in the process of filing bankruptcy, which means that they are either worthless or close to becoming worthless.