ommon Stock
Common stock represents the most common type of stock issues by companies and entitles shareholders to participate in the profit and growth of the company they invest in. When looking at investing in the stock market for the most part you are buying common shares in a company. The two main income drivers for common stock are that they deliver appreciation (through growth in value of the company) and through dividends paid out of the company to shareholders. Dividend payments can change over time so predicting cash flows through common stock holdings can be difficult.
Common stock are typically voting and allow holders to ‘vote' on issues like electing the board of directors or other issues put to a vote. This is not always the case, however, so it may be important to refer to the specific features of a class of shares you are investing in.
Holding common stock also comes with ‘pre-emptive rights' to maintain the same proportion of ownership should a company issue a new stock offering. This means that holding common stock will entitle you to pre-emptively buy new shares should the company be completing an issuance.