Stock are bought and sold in shares. Stocks are often called "equities". An investor can make money from stocks in two ways: dividends and capital gain. Dividends are checks that shareholders get, usually every quarter, as their share of the company's profits. The company's board of directors determines the dividend paid, but it usually doesn't change very often. Not all companies pay dividends, some companies reinvest dividends in the corporation. This is called “retained earnings or profits”. Capital gains are realized when an investor sells shares at a higher price than what he originally paid for them. There are three main categories of stocks: Capital, common, and preferred. Within these three categories, there are five basic types: Income, blue chip, growth, cyclical, and defensive.