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Investing

What is a stock?

The meaning

A tiny piece of ownership in a company. When you buy a stock, you become a shareholder, meaning you own a slice of that business, however small. If the company does well, your slice becomes worth more. Some stocks also pay dividends (see above). We dig into this more in Stocks, ETFs, Mutual Funds, and REITs.

Example
  1. 1 companySplit into 1 billion shares
  2. 10 sharesYou buy
  3. Your sliceOf the profits
Owning shares means you share in the profits, through price, dividends or both.
Walk through the numbers

A company is split into 1 billion shares. If you own 10 shares, you own a tiny piece of it, and you share in its profits through a rising share price, dividends or both.

Why it matters

Stocks have been one of the main ways everyday people grow their money over long periods, with more ups and downs along the way.

Read: What the Heck Is the Stock Market? →Compare: REITs vs stocks →

Related terms

Stock marketThe marketplace where shares of companies are bought and sold.DividendA cash payment a company or fund sends you for owning its shares.Capital gainsThe profit you make when you sell an investment for more than you paid.ETFA fund that holds many investments and trades like a single stock.

See all 34 terms · Read the full glossary

For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.