Stocks

When you own a stock, you own part of a company. A company typically issues stock to accumulate start-up capital or to help pay for other company expenses and activities. Stock can also be referred to as equity. Investors can make money on stock by either receiving a dividend (payouts from profits) from the company or by selling stock for a higher price than was paid for it – called capital appreciation.

Stocks are typically categorized as either common, or preferred.

Common stock

Common stock is the most basic form of ownership in a company. Beyond a percentage share of ownership, common stock typically also gives shareholders the right to vote on issues.

Preferred stock

One of the key benefits of preferred stock is that owners are generally entitled to a share of the company’s dividends (profits distributed in cash) before common stock holders. Preferred stockholders generally receive dividends at specific times and in pre-determined amounts, whereas common stockholders may or may not receive dividends, based on company profits. However, unlike common stock, preferred stock usually does not offer voting rights.

Get the help you need

Talk with your Account Executive if you have questions about stocks, or to learn more about how to prepare for retirement.

Risks and returns vary, depending on the economy, political scene, the company’s performance and other market factors. Remember, any investing involves market risk, including possible loss of principal.