Stocks (Shares) represent equity ownership in a company.
Stocks (Shares) are either common stock or preferred stock.
Common stock typically carries voting rights that can be exercised in corporate decisions.
Preferred stock does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.
A stock certificate is a legal document that specifies the amount of shares owned by the shareholder.
A shareholder (Stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company.
Types of shares categorize by some of their characteristics.
Blue Chip Shares
These shares are with companies that have large market capitalization and over one billion dollars. They have steady growth and profit. In Australia they are normally the top 150 companies and are good secure investments for long term growth. Australia Blue Chip companies include Major Banks, supermarket chains, BHP, Telstra and so. AXS carries a list of these.
These are companies that hold a larger part of their profits for expansion. Companies with shares in this category do not pay high dividends the percentage is usually around 2 – 3% or less. These companies grow in value because of the profit.
These types of shares will pay you a healthy dividend, they are sort by investors whose purpose is to derive steady income from the market. Profits determine the growth, companies with these types of shares generally keep about 40% and pay returns of around 4-6% or more.
These are companies and businesses that perform well under most conditions, sometimes referred to as ‘lean and mean’. They will form part of your portfolio if you are risk minimizing and fear market corrections. They are not boom stocks, but steady ones.
Defensive stocks includes: utilities, food, property trusts, pharmaceuticals or necessary items.
These are shares that companies are affected by economic cycles they do well in an upturn and not so well in a downturn. They deal in commodities that are in or out of favor depending on market mood. These shares are within the tourism industry, airlines, building industry etc.
These are start up companies with no performance record. Their share price is usually around $1.00 or less. There are plenty in the market, be careful with these companies as they may not last.
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