A share signifies a piece of ownership in the corporation or a financial asset which provides an opportunity to claim an equal share in the profits of the firm and equal obligation in its debt and losses.
For example, if an Investor buys stock in Scentre Group (ASX: SCG), then he owns a small piece of ownership in Scentre. Many of the investors purchase a stock for capital growth, to increase their wealth and protect themselves against inflation. Many of the companies divest its ownership to gain revenue in order to build money or growing businesses.
Let’s say, a retails landlord company, Scentre invests a lot of money via debt and equity channel and accounted market capitalization of about $21.21 Bn (as on November 16, 2018). In order to grow larger in the competitive market, the company needs more capital to get the property, plant and equipment, for strategic investment for acquisitions, and hire more employees. Hence, despite going to borrow money from a bank, the stock comes into play where the company can sell their stake and raise money to fulfill its business objectives.
Basically, there are two types of shares i.e., common shares & preferred shares. Majority of the companies issue common stocks. These stocks have voting rights, holder of these have greater control over the company and get benefit in the form of dividend and capital appreciation. Hence as one acquires more common shares of the company, the ownership in the company will enhance likewise. In comparison with common stock, preference shareholder gets a fixed amount of divided at regular intervals provided the company is earning enough profits, and they typically don’t enjoy the capital appreciation and thus considered less risky when compared with the common stock. Also, in the event of dissolution of the company the preferred shareholder will get the priority over common shareholder in getting the liquidating dividends in case of surplus, however in the case of deficit both kind of shareholders shall be liable up to the amount outstanding w.r.t calls made by the company but hasn’t been paid by the shareholders.
So, the aggregation of all these units combinedly are called issued share capital, it is different from the authorised share capital in the manner that the authorized share capital is the amount of capital that the company’s board may decide to issue. However, this ceiling of authorised capital may be increased by the shareholders by calling a general meeting as & when necessary.
A shareholder may be an Individual or a corporate entity. Being a shareholder, one gets substantial rights such as to vote on critical issues & agendas in the company’s general meeting, receive distributions and also the right to sell it to someone else and enjoy the capital appreciation (if in case it is trading higher than the acquisition price).
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.