Great question! There is no right or wrong answer because there are many different types of stains available and lots of different kinds of siding. In some cases stain is an excellent choice but there are times when paint is better.
You should weigh several factors before you make a decision such as what coating was used last time, what will perform better over that coating, and what will give you the best combination of protection and beauty for your home.
Because stains are available in dozens of varieties from transparent stains that tint the wood but do not offer much protection, to solid stains, which are not much different than paint. Most siding stains on the market today are the solid variety. Solid stains can be used over old stain or paint or they can be applied over new pre-primed clapboards or cement board.
Solid stains can and do peel! Semi-transparent and semi-solid stains have less pigment and tend to look more rustic. Both are an excellent choice on homes with natural cedar shingles. One drawback, however, with semi-transparent or semi-solid stains is that people tend to wait too long between applications (say 6 years instead of 3) and the shingles start to deteriorate because the stain loses its protective value.
The first thing you need to do is find out what the substrate, or surface you will be coating is. There are many possibilities including cedar shingles, cedar clapboards, cement board, pressed board siding (often called Masonite), and even old aluminum or vinyl siding. Second, you will need to make an educated guess as to what product was applied last time (if the siding isn’t new.) Most old clapboard homes have paint or solid stain, though some do have semi-solid or semi-transparent stain.
What We See
Many homes with cedar shingles have semi-transparent or solid stain. A good rule of thumb is to use a semi-solid stain if you want a rustic look and have cedar shingles or clapboards that are bare, or if you have old ones with a penetrating stain on them and want to keep the same look. If you are re-coating a surface that was previously painted or coated with a solid stain, you should consider a full coat of oil primer and a coat of solid acrylic stain or acrylic paint.
They will look almost the same, with the stain going on a little thinner and showing a bit more of the characteristics of the siding. If you are coating new primed shingles, clapboard, or cement board, use a primer recommended by the manufacturer and opt for premium paint.
Any time you are painting a nonporous surface such as aluminum siding, you should use a top quality primer and acrylic paint.