Many companies return cash to shareholders as dividends — preferred-stock dividends are fixed by the share’s stated rate, while common-stock dividends are declared at the board’s discretion based on profitability, cash flow, and reinvestment needs. The tax treatment of those dividends (qualified vs. ordinary) and the policy choice of whether a company should distribute or retain earnings is covered in depth in section “Dividends and Tax Drag”.
Stock-picking has long divided into two camps. Growth investors target companies whose earnings are expected to expand faster than the market, often reinvesting profits rather than paying dividends; value investors target companies whose market price appears below their intrinsic worth based on existing fundamentals. Both styles have decades of academic and practitioner debate behind them. For the analytical treatment — when each works, the factor literature, the empirical record — see section “Value Equities” and the surrounding “Picking Stocks” material.
Stocks are usually identified by Stock symbols or Tickers. Services like Yahoo Finance, Google Finance, Brokerage firms provide searching tools to find stock symbols for the company of interest.
Platforms now allow buying fractions of shares, making stock ownership more accessible to individuals with limited capital. Companies can split stocks to make them more affordable, e.g. exchanging one share for twenty shares, or reverse split, e.g. exchanging ten shares for one. Stock splits do not change the value of the company, but they can affect the stock price.