Definition of Common Stock

Common stock is what most people refer to when they speak of buying or selling stock. It is extremely easy to trade and to get accurate information on, and it's the most common investment for investors. Common stocks can provide many perks, such as voting rights and quarterly dividend payments.

Common Stock

One share of common stock represents ownership of a small percentage of the respective company.

Voting

Each share of common stock owned entitles the purchaser to one vote on certain issues within the company. Issues such as instituting new corporate policy, electing or re-electing the board of directors and stock splits are voted on, usually annually, by the investors.

Dividends

The board of directors of a company will choose the amount of a dividend that will be paid, and this amount will vary from quarter to quarter. Common stockholders are last in line for dividends behind all debtors and preferred stockholders; meaning that they will get what money is left over after all others have been paid.

Price

The price of a common stock depends on the perceived health of a company and fluctuations in the overall stock market. Most earnings from common stock will come from price appreciation as opposed to dividend payments.

Purchasing

Common stock can be easily bought through many channels, such as banks, stockbrokers or even online trading accounts.