Common stock represents a share of ownership in a corporation. When you buy common stock, you become a partial owner of the company and typically receive voting rights on major corporate decisions, such as electing the board of directors.
Common stockholders may receive dividends, though these are not guaranteed and depend on the company's profitability and board decisions. They also benefit from capital appreciation if the stock price rises.
However, in the event of bankruptcy, common stockholders are last in line to receive assets after creditors and preferred shareholders. Despite this higher risk, common stock has historically provided higher long-term returns than most other investment types.