Common Stock
The standard class of share that gives holders voting rights and variable dividends. Most publicly traded shares are common stock.
Common stock is the primary ownership class issued by corporations. Common shareholders have the right to vote on corporate matters — electing the board, approving mergers — typically at one vote per share.
Dividends on common stock are discretionary: the board can raise, cut, or suspend them at any time. In a bankruptcy or liquidation, common shareholders stand last in line, behind creditors and preferred shareholders.
Despite the residual risk, common stock historically delivers the highest long-run returns of any asset class, because holders capture the full upside of a growing business.
Related Terms
Dividend
A cash (or stock) payment a company makes to shareholders from its profits, typically on a quarterly schedule.
BeginnerEx-Dividend Date
The cutoff date to own shares and qualify for the next dividend payment. Buy on or after this date and you miss the dividend.
IntermediatePreferred Stock
A hybrid share class with fixed dividends and liquidation priority over common stockholders, but usually no voting rights.
IntermediateShare
One indivisible unit of ownership in a company. Your ownership percentage equals your shares divided by total shares outstanding.
BeginnerShares Outstanding
The total number of a company's shares currently held by all shareholders, including insiders and institutions.
Beginner