Julia could make money from owning a share of stock in two primary ways:
- Capital Gains : This occurs when the price of the stock increases after Julia buys it. If she sells the stock at a higher price than what she paid, the difference is her profit, known as a capital gain
- Dividends : Some companies distribute a portion of their profits to shareholders as dividends. Julia could receive these dividend payments regularly while owning the stock, providing a source of income
These two methods-capital gains from selling the stock at a higher price and dividends from the company’s profit sharing-are the main ways investors earn money from stocks.