Common Stock

One of the more "common" types of stocks and equities is known, strangely enough, as common stock. Signifying an ownership interest in a corporation, common stock is categorized by its rate of growth and income. For example, common stock can be in the low-income category, but be characterized as aggressive growth. Conversely, high-income stock can be in the low-growth category.

Companies that issue common stock but often do not pay dividends are companies in the high-growth stage. These companies reinvest their profits into the company in order to fuel its growth. What this means to you as an investor is that, while you may not get dividend income, the price of your stock will go up because the company is growing.

Some companies pay dividends to shareholders of common stock. These companies are usually the older, more established, corporations that have already undergone their major growth, but produce a steady stream of dividend income for their shareholders. Stock, common or preferred, issued by large, well-established companies, is known as blue chip stock.

When investing in stocks, you should identify your investment objective--growth or income--before you decide if a particular company is the right place for you to put your investment dollars.

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