Stocks (Shares)

Common Shares

Both public and private corporations can issue common shares. Common shareholders are the owners of a company and initially provide the equity capital to start the business.

Common share ownership in a public company offers many benefits to investors.  The following are some of its main advantages:

• Capital appreciation

• Dividends

• Voting privileges

• Marketability – shares can easily be bought or sold

• Dividend tax credit and capital gains tax

While interest payments are guaranteed to bond holders, dividends are payable to shareholders at the discretion of the directors of a company.

Preferred Shares

Preferred stock is a class of share capital that entitles shareholders to fixed dividends ahead of the company’s common shares and to a stated dollar value per share in the event of liquidation.

Typically, the preferred shareholder occupies a position between that of a company’s creditors and its common shareholders. If a company’s ability to pay interest and dividends suffers due to poor earnings, the preferred shareholder is better protected that common shareholders but worse off than creditors.