Shareholders have the potential to profit from a rising share price and the potential to earn an income from dividend payments. Shareholders also have a range of other rights and benefits. Although, they differ slightly depending on whether you own ordinary shares or preference shares.
Ordinary shares or ‘common stock’ are the most common type of share. An ordinary share represents part ownership in a company and each share is worth an equal amount of equity. Whilst companies may pay dividends on ordinary shares, they are not required to do so.
Unlike ordinary shares preference shares generally provide fixed dividend payments to the owner. In this sense, they provide the owner with ‘preference’ over ordinary shares. This fixed payment comes in the form of an agreed percentage return. It gives the investor certainty as dividend payments are guaranteed unlike with ordinary shares.
As an ordinary shareholder you are able to
As a preference shareholder you are generally entitled to:
However, you generally cannot
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