What is stock?

Stock, issued in units called shares, represents ownership of a piece of the issuing corporation. Corporations issue stock to raise money for their business operations during their initial public offering (IPO). Stock can then be bought and sold on a market such as the New York Stock Exchange or Nasdaq (National Association of Securities Dealers Automated Quotations).  

Stock can generate a return (i.e. make money) for its owners in two ways: 

• If the price of the stock goes up after you buy it, and you sell it for more than you paid. 

• Through dividends, or payments to shareholders. Not all stocks pay dividends. 

Over the last century, the stock market’s average rate of return is 10%. However, that average is for the entire market over time. Individual stocks can lose money, and corporations can go out of business. In addition, the return on the entire stock market can fluctuate. Market crashes are well documented; however, over time the market has regained and surpassed lost value. 

Types of stock 

Most individual investors own common stock, which entitles them to receive any dividends and vote on shareholder resolutions at the corporation’s annual general meeting. If you own stock in a company, we urge you to vote your shares. Find more information in Shareholder Advocacy.  

Many institutional investors own preferred stock, which does not bestow voting rights, but is less volatile and provides a higher claim for dividends and any payouts if the company goes bankrupt. Institutional investors are organizations such as congregations, universities, or pension funds. 

Stock can also be classified by market capitalization, which represents the total value of all company shares across the market. Large-cap corporations have more shares on the market, and their shares tend to sell at higher prices than shares for small-cap or mid-cap companies.  

These classifications break down as follows: 

Company size	Market capitalization
Large-cap corporation	$10 billion or more
Mid-cap corporation	$2 billion to $10 billion
Small-cap corporation	$250 million to $2 billion

Large-cap corporations are mature companies -- household names like Apple, Amazon, or Walmart. Their stocks are less volatile but also subject to less growth. Small-cap and mid-cap stocks are more affordable and have more room for growth, but can also be more volatile.  

Fractional shares 

Fractional shares are parts of a single share in company stock – for example, half a share in Tesla. They typically occur as a result of stock splits, dividend reinvestments, or company mergers and acquisitions. 

Fractional shares can help ordinary investors build a more diverse portfolio at a more affordable price. Some blue-chip stocks can cost hundreds, even thousands, of dollars per share; for example, as of this writing:  

• A share in Coca-Cola costs $1,252.09 

• A share in Costco costs $890.58 

• A share in Microsoft costs $428.04 

Fractional shares allow you to buy the amount of stock you can afford, whether it’s $5 or $500 worth of stock in a high-priced company. This lets you easily diversify your stock portfolio. 

The main disadvantage of fractional shares is you can’t buy or sell them directly yourself – you need to go to a brokerage. This means they are difficult to transfer if you switch to a new broker. They also may not be available for all company stocks and do not typically include shareholder voting rights.  

Evaluating company stock 

Owning stock means you own a piece of that company – so deciding which companies you want to own shares in requires researching these companies.  

Socially responsible investing or ESG investing can help. Responsible investing looks at both traditional considerations such as the company’s financial performance and additional data about the company’s environmental, social, and corporate governance practices.  

In the past, information about a company’s ESG record was hard to find or cost money to access. Now there are many free resources.  

Know what you own 

The first step to evaluating company stock is to inventory any individual stocks you currently own through a retirement or brokerage account.  

Once you know what you own, you can start researching these companies to decide if you want to keep their stock or find other companies you would like to invest in instead.  

A good place to start is the company’s website. Check to see if the company has published: 

• A sustainability report 

• An ESG policies and performance report 

• A report on diversity, equal pay, or worker safety and benefits 

Keep in mind the company will be putting its best foot forward in these reports. Check for policies, projects, and statistics to back up their claims.  

Financial performance 

You can find information about the financial performance of the companies you own stock in from several sources: 

• Reports the company must file with the Securities and Exchange Commission, such as the annual 10-K or quarterly 10-Q, available on the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) website. Look for figures on revenue, income, earnings, and return. 

• Financial data providers such as Morningstar or Sustainalytics 

• Brokerage platforms such as Charles Schwab or Fidelity 

• Stock exchange sites such as NASDAQ or New York Stock Exchange 

Independent ratings and reports 

Besides the company’s own reports, you can also find reports by independent organizations such as media outlets or nonprofits that rank companies on almost any basis imaginable.  

Going back to your ESG wheel, search online for a report or ratings system for companies based on the issues most important to you.  

Here are some examples of company ratings and reports for various issues: 

Issue	Report
Climate and Sustainability	Climate Action 100+
Climate and Sustainability	Corporate Knights Clean 200
Racial Justice and Equity	As You Sow Racial Justice Scorecard
Racial Justice and Equity	As You Sow Workplace Equity Scorecard
Racial Justice and Equity	Proxy Impact Racial Justice and Equity Scorecard
Employee Benefits	Fortune 100 Best Companies to Work For
Human Rights	Corporate Human Rights Benchmark
Women	Forbes Best Employers for Women
LGBTQ+	Human Rights Campaign Equality Index

Understanding how companies perform on the environmental, social, and corporate governance factors that matter to you will help you identify companies to invest in that align with your values.  

Stock isn’t the only place you can practice responsible investing. Most people invest through mutual funds or exchange-traded funds. Learn how to find and evaluate mutual funds and ETFs 

Green America is not an investment adviser, nor do we provide financial planning, legal, or tax advice. Nothing in our communications or materials shall constitute or be construed as an offering of financial instruments or as investment advice or investment recommendations. 

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