Common stock represents ownership in a corporation and is one of the primary ways companies raise capital. When individuals or institutions purchase common stock, they become shareholders and own a portion of the company. This ownership comes with certain rights, including voting on major corporate decisions—such as electing board members—and receiving dividends, if declared.

One of the key benefits of owning common stock is the potential for capital appreciation. If the company performs well, its stock price may rise, allowing shareholders to sell their shares at a profit. Additionally, some companies pay dividends as a share of profits, providing regular income to investors. However, dividends are not guaranteed and depend on the company’s financial performance and board decisions.

Common stockholders are last in line when it comes to claims on a company’s assets. In the event of bankruptcy, bondholders and preferred shareholders are paid before common shareholders. This higher risk is balanced by the possibility of higher returns compared to other forms of investment.

Common stock is traded on public exchanges like the TSX or NYSE, making it accessible to a wide range of investors. For businesses, issuing common stock is a popular method to attract investment without incurring debt.