Trust Services

Different Types of Stock

There are two main types of stocks:

  • Common Stock
    The most "common" form of stock ownership is issued in this form. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.

    While common stock has historically generated higher returns (growth of principal plus dividend) than most other investments, it also comes with a high degree of risk to principal as shareholders will most likely lose their investment if the company goes bankrupt since common stock holders are last in line as a creditor.
  • Preferred Stock
    Preferred stock also represents ownership in a company but usually doesn’t come with the same voting rights. Unlike the dividends paid by common stock, which are not guaranteed, preferred stock most often has a guaranteed a fixed dividend. Preferred stock also differs from common stock in that preferred shareholders stand ahead of common stock holders in the creditor line. Often, preferred stock is considered to be a hybrid between stocks and bonds.

« Return to Stock Basics


First Commonwealth Advisors is a registered trademark used to market various wealth management products and services. Investment management, trust and fiduciary services are provided by First Commonwealth Bank. Certain insurance products are offered through First Commonwealth Insurance Agency, a licensed insurance affiliate. Securities, insurance products and advisory services are offered through Essex National Securities LLC, member FINRA/SIPC and an SEC registered investment advisor. Essex is not affiliated with First Commonwealth Bank.

©2015 First Commonwealth Bank; 601 Philadelphia St., Indiana, PA 15701
Secure. Convenient. Mobile.
Back to Top