Insider Hint: Conservative Investments or High-Risk Adventures?

by David Jenyns on January 21, 2008

The common stockholder has a voice, frequently a loud one, in the affairs of his company. The shareholder is the prime beneficiary of stock splits, rights, and spin-offs, or distribution of assets. The advantages of common stock are several.

Even a moderate increase in a dividend rate can shoot the yield on the original purchase price of the stock to a most pleasing 10 or 12 percent. Even at depressed prices and high interest or dividend rates, few bonds or preferreds could touch this. Stocks are also extremely marketable. More people own stock than own bonds or preferreds, and more people trade in them. Stocks can be a hedge against inflation, though this argument can be overplayed and frequently is. For the common stockholders who make it and some make it big, even during inflation dividend dollars may be increased.

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