Common stock represents ownership in a company and a claim, or 'share', on a portion of the company's assets and earnings. As an investor, owning common stock gives you the right to vote at shareholders' meetings, receive dividends (if any are given), and benefit from the company's financial success through capital appreciation.
Common stock is a type of equity investment, indicating that you own a piece of the company. The more shares you own, the larger the portion of the company you own. Common shareholders can influence the company's policies and direction by voting at the company's annual general meeting or at special meetings.
One of the main benefits of owning common stock is the potential for capital appreciation. If the company performs well and the value of its assets increases, the value of the stock will also likely increase.
However, it's important to note that common stock also comes with risks. If the company does not perform well, the value of the stock may decrease. In the event of bankruptcy, common shareholders are last in line to receive any remaining assets after creditors, bondholders, and preferred shareholders.
Apple Inc. issues common stock to investors, making them partial owners of the company. Apple's common stockholders have the right to vote at the company's annual general meeting and receive dividends, which Apple has been known to distribute regularly.
Amazon Inc.'s common stock represents ownership in the world's largest ecommerce company. However, Amazon has traditionally not paid dividends, choosing to reinvest all profits back into the business. Despite this, Amazon's common stockholders have benefited immensely from capital appreciation.
Ford Motor Company's common stockholders have the right to vote at shareholder meetings and receive dividends. Ford has a long history of paying dividends, providing an income stream to its common shareholders in addition to any potential capital appreciation.