When someone buys a share in a company, they become a part owner. If you own all the shares of a company, you’ll own the entire company. (Equities and stocks are simply other names for a share.)
If a company has a million shares and each share is worth £1, the company will be valued at £1m.
So, when you own a share in a company, you become entitled to a share in the profits that company makes. These payments of profits are called dividend payments. Let’s say the company makes £100,000 in profit and decides to pay this out to shareholders as a dividend payment – the share owners would receive 10p for each share they own.
The value of each share will go up and down with how well the company performs and how well other investors think the company may perform in the future.
