What Is a Shareholder?

By Kristi Waterworth – Updated Dec 16, 2024 at 1:41 PM

Key Points

Shareholders own part of a company and may have voting rights and dividends.
Common stock offers potential high gains and voting rights, unlike preferred stock.
Minority shareholders own less than 51% of a company, often via stockbrokers.

Investing has a language all its own, from terms relating to a company's finances to words for different investing methods. "What is a shareholder?" is a question that comes up often. Simply put, it's just one of many terms for people who put their money into a company. Let's explore what that really means.

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Zoomed in picture of a stock certificate. — Image source: Getty Images.

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Dividend Payments

The distribution of a company's profits to its shareholders. Dividends are usually paid in cash but sometimes in company stock, as well.

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Common stock offers voting rights and a great deal more potential to see massive gains over the longer term. That makes it very attractive for regular investors.

Unlike preferred stock, which tends not to appreciate as much, common stock often sees much higher appreciation over time, even though they're behind bonds and preferred stock if a company liquidates and distributes whatever assets remain.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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