Understanding Ordinary Shares: A Beginner's Guide to Common Stock

When investing in the stock market, you need to understand what ordinary shares are. There are a few different types of stock available, and you need to understand which type you are purchasing. Here are the basics of ordinary shares and what they can provide to investors.

Ordinary Shares

Ordinary shares are also sometimes referred to as common stock. With this type of stock, you are entitled to a partial ownership in the company. This type of stock does not have any predetermined number of dividends allocated to it. The only time that the owner of ordinary shares will receive a dividend is after the preferred shareholders have already been paid.

Investment Considerations

By owning ordinary shares in the company, you will be able to have voting rights on important issues. The amount of shares that you own will determine how many votes you get. Owning this type of stock will rarely provide you with any dividend payments, and you will be last in line for assets if a company goes under. You can obtain ordinary shares through any of the normal stock exchanges available. This type of stock will often be less expensive than preferred stock, but it also carries fewer benefits.