Common shares are a form of equity capital in Canadian or foreign (e.g., US) companies. They are called 'common' to differentiate them from preferred shares. If both common shares and preferred shares exist, then common share owners cannot be paid dividends until all preferred share dividends are paid in full. A company can also have multiple classes of common shares, typically with different voting rights (e.g., ). Common shareholders are last in line behind creditors, debt holders, and preferred shareholders to make a claim for a company's assets in the event of a liquidation.
Some Canadians include individual stocks in their portfolios. Such stocks may be selected according to several different investment styles, depending upon the investor. The dividend income from such stocks is generally eligible for the dividend tax credit when the stocks are held in non-registered accounts. However, trusts and real estate investment trusts (REITs) may distribute only a minor part of their payments as dividends. In such cases, detailed breakdowns of distribution type are usually available on each company's website.
Note that REITs, gold, and commodities, are also considered elsewhere. Index funds and exchange-traded funds (ETFs) containing common shares from Canadian companies, and the lack of diversification of the Canadian stock market, are covered under Canadian equities.
Dividend paying companies mostly pay dividends quarterly, although some pay monthly. Over the course of a year, there are three dividend cycles that occur. Companies that make their quarterly dividend payments in:
- January, April, July and October
- February, May, August and November
- March, June, September and December.
A consideration for those seeking dividend income, you can select your stock holdings knowing which companies pay dividends in which cycle. This can result in you earning dividend income in each month. Another approach would be to match dividend income to expected monthly expenses.
- Ontario Securities Commission, How stocks work - 2 main types of stock, viewed February 3, 2018
- Tara Gry, Dual-class share structures and best practices in corporate governance, Parliamentary Information and Research Service, Library of Parliament, Canada, August 2005, report PRB 05-26E, viewed February 12, 2018
- TMXmoney, Stock Market Terms - Stock Market Vocabulary: Glossary of Terms, viewed February 12, 2018.