What is a shareholder?

A shareholder is person or a corporation that owns at least one share of a company’s stock. They are considered the “owners” of a company, and will see share price gains only if the company sees financial success. They also have rights to audited statements of the company’s books, and can vote on important matters.

Companies are always trying to increase shareholder value. That means they aim to increase the attractiveness and profitability of a company so that owners of stock in the company benefit.. It also generally pushes up the price of the shares on the stock market and attracts potential investors.

Successful investors know that there is more to good stock investing than simply looking for stocks that will let them realize capital gains. You can add a great deal of value to your portfolio when you also select stocks that are prepared to distribute their profits to the shareholders.

One way a company might increase value for a shareholder is with dividends. Dividends are typically cash payouts that serve as a way companies share the wealth they’ve accumulated through operating the company. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company.

Another way that companies increase shareholder value is through a stock buyback program. Stock buybacks raise a company’s earnings per share. It’s simple arithmetic: buybacks reduce the number of shares outstanding. To get earnings per share, you divide total earnings by the number of shares outstanding. When buybacks reduce the divisor—because the company now has fewer shares outstanding—it pushes up earnings per share.

As well, stock buyback programs bid up the price of the stock while the company is buying it back. This instantly increasing shareholder value.

All in all, at TSI Network we feel that every shareholder should familiarize themselves with our three-part Successful Investor strategy—we think it’s the smartest approach for value investors:

1. Invest mainly in well-established companies;
2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
3. Downplay or avoid stocks in the broker/media limelight.

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