What is an action?
An action is a property right issued by a listed company. When a company decides to issue shares, it sells them on the stock market. By buying shares you become an investor shareholder of the company, which means that he becomes a co-owner of the company in proportion to the number of shares he holds in his portfolio.
A share is actually a fraction of the capital of a company. By owning shares in a company, it gives you certain advantages:
- You will become owner of a weak part of the company
- You receive yield (if the company distributes it)
- You can participate in general meetings and voice your opinion on company decision-making
Example: A company consists of 100 sharesI own 5 then I’ll hold 5% of the shares By the company.
The share price
The company’s share prices fluctuate every day increase or at reduce. The value of a share can fluctuate depending on various factors, such as financial performance of the company, the global economic conditionsTHAT growth prospects and geopolitical events.
In France, a trading day extends from 9 in the morning To 5:30 p.m. (Monday to Friday, except certain holidays) and during this period the stock price fluctuates in real time according to supply and demand.
Take the example of Air Liquide: In 10 years, the share price has declined €66 To €164.
In July 2013, if you had bought 10 shares of this company for €660in July 2023 the value of your 10 shares would be €1640.
Depending on company policy, some companies promote growth of the title and other favors payment of dividends. Typically, when a company like TotalEnergies pays a dividend, the share price shows performance less important.
As you can see, the performance of TotalEnergies stock is less important than Air Liquides.
When investing in the stock market, two strategies are available to you:
- Invest in companies if the share price rises
- Invest in companies which pays dividends
It is not uncommon for investors to combine these two strategies to receive passive income and expand their portfolio in the long term.
ONE IPO Or IPO (IPO) is a financial transaction that consists of putting a company’s securities up for sale. When a company performs this operation, it opens its capital to investors institutional, individual or to his employees with the purpose:
- Accelerate your growth
- Foundation projects
- Reduce your debt
In an IPO, the share price is defined based on the company’s characteristics, such as its assessmenther performance and His financial data (margin, turnover, etc.).
Once you are in the market, the price of a stock varies depending onSupply and demand. The more buyers there are, the more the share price will tend to rise. Conversely, the fewer buyers, the more the share price will tend to fall.
The share price can also go up or down dependingnewsof business results and His economic health E.g.
What is a shareholder?
As you will have understood, you become a shareholder in a company when you own shares in it. A shareholder is therefore a person who owns one or more shares of a listed company.
As a shareholder, you have the right to participate in general meetings By the company. This allows you to give your opinion on important matters such as future purchases of the company, appointment of directors, payment (or not) of dividends and other key decisions.
The different types of shareholders
Within a company’s capital, it is possible to find several types of shareholders:
Individual shareholders
Individual shareholders are people who invest in the stock market. They are generally called “small holders” and usually hold their shares at one Share savings plan (PEA) or on a Ordinary securities account (CTO).
Employee shareholders
Employee shareholders are individual shareholders who own shares in the company they work for. Generally, by purchasing their shares, they receive the benefits of a reduction or some free shares.
Majority shareholders
Majority shareholders are those who own a large part of the company and can be families or some partner companies.
Institutional shareholders
Institutional shareholders are banksof insurance companies or some Investment funds who invest large sums in a company.
Investors buy and sell stocks on stock exchanges in hopes of making gains. surplus through share price growth or by receiving dividends.
Yield: What is it?
THAT yield represent a part of the profit of the company, which is distributed to the shareholders. Dividends are very popular in the financial markets and allow you to do so remunerate shareholders and retain in the long term.
At the general meeting, the shareholders decide to:
- Whether dividends are to be distributed or not
- Of the dividend amount
- The date of dividend payment
Dividends are highly valued by shareholders because they allow it receive passive income.
For example: L’Oréal pays €6 dividend per share once a year. If you keep 10 shares in your portfolio, when the dividend is paid, you will receive €60which you can use to buy new shares or to go to a restaurant.
A company may decide not to pay dividends in order to reinvest profits to develop further.
Payment of dividends
It is important to clarify that dividends are not automatic. A company may not pay dividends and may also decide not to pay more for any reason.
Every company has its own policy regarding the payment of dividends.
Some companies such as Axa, Air Liquide and LVMH pay their dividends once a year and other companies such as Visa and Apple pay their dividends Every 3 months.
With the exception of TotalEnergies, CAC 40 companies pay their dividends once a year. In the US, many companies pay their dividends monthly or every 3 months.
Are dividends magic?
As you can imagine, the payoff is not magic. When a company pays dividends, the growth in the share price limited.
Take the example of L’Oréal: The share price is €423when the company splits the dividend to pay it out to shareholders, the share price is automatic deducted the size of the dividend. The share price then goes down €423 to €417 (€423 – €6).
This means that what you gain through dividends, you lose in valuation.
Who can receive dividends?
All shareholders of a company receives dividends when the company pays them out without any administrative action being taken.
The only condition is to hold one’s shares day before the ex-dividend date. To do this, you can consult the dividend calendar available on the companies’ website.
What are the differences between indices and stocks?
Unlike a stock, an index does not reflect the performance of a single company, but reflects the performance of more actions.
THAT stock indices make it possible to determine the performance of a basket of shares that is representative of:
- of one market such as the CAC 40, S&P 500 or DAX
- of one activity area such as energy, technology and health
For example, in the US the S&P 500 represents 500 largest US companies in terms of market capitalization and has a strong dominance over the technology sector.
To invest in companies, 2 solutions are available to you:
- Buy shares and become an owner of a smaller part of the company
- Do trade on shares and not to own By the company
The choice of solution depends on you investor profile and yours Goal. If you want to invest in long termcan you favor first solution. If you want to invest in short term while shopping, you can favor other option.
Buy shares
To buy shares, you must open one Share savings plan (PEA) or a Ordinary securities account (CTO) at a stockbroker or a bank.
Any adult can open a PEA, provided they are domiciled in France for tax purposes and within the limit of one plan per person.
If you don’t live in France, you must open a CTO to invest in the stock market.
PEA allows you to buy shares fromEuropean companies with advantageous taxation after 5 years and the CTO allows you to buy shares in companies in Worldwide with lower taxation.
To buy shares in a company, you simply need to:
- Credit your account
- To research the share you want to buy
- cabinet a purchase order thereafter to validate
One timepurchase order executed, the stocks will appear in your portfolio and you will own them.
Low share trading
To to act on stocks, you just need to open a trading account with a broker like eToro And XTB E.g. In this case, you will not own the shares, you will not be a shareholder in the company, and you will not receive dividends.
This solution is widely used by merchants who simply want to speculating on share prices in the short term.
Conclusion
A share represents one fraction of the capital of a business, and when you own one, you stay shareholder By the company. By being a shareholder in a company, you are owner of a part of the company you receive yield and you can participate general meetings which takes place every year.
Depending on your profile and your strategy, you can invest on shares and keep them long periods or do trade and make speculation on it short term.