Shares

A share is a part of a company that can be bought and sold. Owning shares makes you a partial owner in the company. Shares tend to be longer term investments due to their volatility. 

They are also known as equities and stocks. 

Nothing – these shares, equities and stocks all refer to the same investment vehicle.

Generally, an ordinary share entitles its owner to dividend payments and voting rights in the company’s AGM. Preference shareholders, however, do not usually have voting rights. Preference shareholders receive preference over dividend payments, and if the company was to enter bankruptcy, they would receive payment before ordinary shareholders.

To buy shares in listed companies you will need a broker. There are two main types of brokers, online or discount brokers and full service brokers. You will purchase shares through your broker by placing an order with them. Online brokering services are usually offered by banks. Brokers will charge a brokerage fee.

There are two main ways people can make money from shares. One is from capital gains from selling the shares after they have risen in price, and the other way is through receiving dividends.

Yield is a measure of the income return on holding a security. Yield is usually expressed as a percentage based off the investment cost (whether at face or current market value). Yields may be known or anticipated depending on whether the security experiences major fluctuations.

Yield is associated with risk, the higher the risk, the higher the yield as investors demand a higher return in exchange for taking on more risk. A lot of the time listed yields are not guaranteed but are instead an estimate of future returns.

 

Types of yield calculations differ depending on asset.

Stock yields

Stock dividend yields come in two varieties, cost yield and current yield.

Dividends are a portion of the company's profits that is paid to shareholders. If a company makes a profit, they might issue a dividend. Dividends are paid up to four times a year, after each quarter. Usually dividends are grouped into "interim dividends" and "final dividends".