“Together we can do more than each other on his or her own” – that’s the principle of the share capital. Big projects and big corporations need a lot of money – that’s why their founders usually use share capital to establish and manage them. Sometimes you can’t collect the sum of money you need to manage your project on your own, but share capital is the answer here. In this article we will overview such a phenomena as stocks and share capital.
Stock is a security which secures the someone’s right to hold the define share of a define corporation’s capital. The owners of stocks are usually called shareholders. For example, if you have the stocks of the Coca-Cola Company, you are a shareholder of the Coca-Cola Company.
The income that shareholders receive from stocks is called dividends. The decision whether to pay dividends or not is usually made on the shareholder’s meetings where the top shareholders usually discuss the management of the company.
Role in economy
Stocks play a very important role in economy since the sixteenth century, when sharing capital firstly appeared in the Renaissance Italy. Sharing capital enables many people to take part and make profit from big projects, like foreign trading, industrialization or high-tech. Also it is an incredibly important mechanism of financing for business. Without sharing capital entrepreneurs had to use only their own money or borrow money from the banks, which slowed down the economical development. So in many cases we should be grateful to the millions of ordinary shareholders for enormous economical growth in the recent centuries.
Treasury shares are stocks held by the company on its own.
Shares outstanding are the stocks held by the third parties (which are not held by the company).
Issued shares is the sum of the treasury and outstanding shares.
Shares authorised include both issued and unissued but sertificated stocks.
Why do companies hold its own stocks?
The existence of the treasury shares can raise some questions. There are certain reasons why companies can buy their own stocks. These reasons can be:
- Avoiding hostile takeover;
- Cutting down taxation;
- Raising up dividends per one stock because of decreasing of the whole number of them;
- To sell them with profit later;
- To reward its employees with the company’s stocks;
And so on.
Types of stocks
There are two types of stocks: preferred and common stocks. Privileged stocks give you preferences in achieving dividends and returning your money during the bankruptcy of the organization, but they generally don’t give you voting rights. In such case privileged stocks are similar to the bonds. Common stocks don’t allow you such privileges, but they provide you with voting rights on the shareholders’ meetings.
The controlling stake
If someone controls 50% +1 stock of any company, it is called that he or she has the controlling stake of this firm. The person who has the controlling stake is called a controlling shareholder, and this means that he or she can dictate his or her will to the company.
If you are the biggest shareholder of the company, but control less than 50%, this means that he of she has big control over the company, but have to act carefully not to be left on the other’s mercy.
The dividend aristocrats
Stocks with a long history of high profitability are called the dividend aristocrats. “Dividend aristocrats” is a popular term among financial companies, which suggest their clients to invest in them.
Are stocks useful for trading?
Of course, they are. They are useful for both traders and investors. You can achieve money from both selling stocks at a higher price than you have bought and from dividends. Also investing in stocks is a useful way to save your money from the inflation. But, of course, it is risky. If you are not a very skilled investor, perhaps you should consult with your broker before buying stocks.
Stocks are one of the most common financial instruments. It is commonly used in stock exchange and on the different financial marketplaces.
Where can I buy stocks?
You can buy stocks on the stock markets and stock exchanges. You can use brokerage companies or financial online marketplaces to get access there. The most popular stock exchanges in the world are The London Stock Exchange, The Euronext, The Börse Berlin AG, The New York Stock Exchange, The Moscow Exchange and The Shanghai Stock Exchange.
Where can I buy stocks online?
Of course, in the 21st century you can trade stocks online. You can do this with a help of online brokers of online financial marketplaces. The list of the top stock trading in the United Kingdom providers is below.
- Degiro (degiro.co.uk)
- Asset Capital Business inc (ACB) (acb-group.com)
- Freedom 24 (freedom24.com)
- Stake (hellostake.com)
- Shepherds Friendly (shepherdsfriendly.co.uk)
- Capital.com (capital.com)
This list, of course, is not complete, but this websites are the most useful for the stock trading. We hope you will enjoy it.
Stocks are a very important and useful instrument of the financial market. They allow companies to attract investment from many people who become shareholders – big projects need big resources and big money, so the stocks are able to provide it. For the ordinary shareholders stocks provide the ability to take part in big economic projects and enterprises and benefit from it, which democratize the investments.
Nowadays you can buy stocks in different ways. Of course, you can go to your broker or directly to the stock exchange and buy it – but now it’s not the only way. A lot of online brokerage companies and financial marketplaces can provide you with ability to buy stocks online.
Stocks are one of the most common trading instruments on the stock market. Noe you can buy shares of the thousands of the world-famous companies, which work in different spheres from IT to agriculture. You can earn money both from trading and from the stock dividends. We are not going to suggest you some more firms to work with, but we hope you will enjoy stock trading end investing. Have a good profit and good luck!