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The Benefits of Holding Common Stocks


Investing in stocks is a very lucrative investing venture. And we all know that there two most popular kinds of stocks: the common and preferred stocks. Each of them offers distinct benefits. We will focus on one of them—the common stocks HQBroker Online Review.

What rights do we get when we buy common stocks? What benefits can be got?

Share in Profitability

When you buy stocks, you’re also buying a part of the ownership of the company. With common stocks, you have the right to participate in HQBroker Review decisions that can make the company more profitable.

You can primarily earn when the company is earning. The division of profits is based on the number of shares you hold.

Another way to profit from common stocks is by receiving dividend payments. The company’s board of directors can announce dividend payments for a specific time, and if you’re a common shareholder, you can receive some of those.

Management Decisions

Being common stockholder grants you the power to influence company decisions and moves. This is done through the company’s board of directors’ election.

Your voting power is also based on the number of stocks you hold. Typically, the larger your share is, the higher your voting power is. You can use this to influence who sits in the company’s board.

Purchase of New Shares

As a common shareholder, you are also granted preemptive rights.

Preemptive rights give you the right to be prioritized whenever the company issues new shares to the public. In effect, you are entitled to buying a certain amount of shares before such shares are opened to other prospective investors.

Preemptive rights are quite important for many common shareholders since the company usually provides it at a subscribed price based on the number of shares the investor holds.

Sue Wrongful Acts

Suppose you are a common stockholder. Then, you understand that you hold the above rights and you think that the management has, in one way or another, violated your rights. You have the right to sue the company for any such violation.

A court holds the power to mediate and enforce your rights as a common shareholder if a corporation is proven to have violated your rights. This can be done via a single shareholder complaint or a class-action lawsuit.

Voting Rights

This is probably what many stock investors chase after when they invest in common stocks. As mentioned above, common stockholders have the right to influence the management decisions, as well as give their votes every time the company holds an annual or general meeting.

If there are major changes that need to be implemented in publicly traded companies, the company must first let common shareholders to vote on the matter first. As a shareholder, you can votein person or you can use a proxy to do so.  

Conclusion

Common stocks are very appealing to investors because of the benefits they can get from. However, one big disadvantage of investing common stocks is that in the event that the company goes out of business, preferred stockholders will be paid first.

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