I was analyzing the Brazilian stock market and realized that many people still confuse the types of stocks. I will share what I learned about common and preferred stocks because it really makes a difference when building a portfolio.

Basically, when you buy stocks, you are acquiring a piece of the company. The company issues stocks to raise capital, and you as an investor gain the possibility to participate in profits and growth. But not all stocks are the same, understand?

Common stocks, those with a code ending in 3 on B3 (like PETR3, VALE3, ITUB3), give you voting rights at the meetings. This is important if you want to have influence over the company's decisions. You receive dividends, can subscribe to new stocks, and also earn bonuses. The disadvantage is that they usually have less liquidity and no priority in dividend distribution. But if you want to have an active voice, it’s the right choice.

Preferred stocks, with codes ending in 4 (PETR4, SANB4) or 5, work differently. You give up voting rights but gain priority in receiving dividends. There are cases where the company guarantees a minimum percentage of dividends for those holding preferred stocks. Santander, for example, always distributes 10% more dividends to preferred shareholders. These stocks tend to have higher liquidity as well.

Now, if you don’t want to choose between one or the other, there are Units. It’s basically a package that combines common and preferred stocks in a single operation. For example, Santander’s Unit (SANB11) comes with 1 common stock and 4 preferred stocks. You diversify with a single purchase and still get voting rights and dividend preferences at the same time.

The choice between common and preferred stocks really depends on your profile. If you want to participate in decisions and are patient with less liquidity, go for ON. If you prefer to receive dividends more securely and find it easier to sell later, PN is better. Units work well for those who want the best of both worlds without complications.

An important detail that few people remember is the Tag Along. It’s a right that protects minority shareholders if the company is sold. If someone acquires control, you have the right to exit at the same price. Not all stocks have 100% protection. TRPL3, for example, offers only 80% Tag Along for common stocks and 0% for preferred stocks. This matters a lot when choosing.

In the end, common and preferred stocks are two different strategies within the same market. Study each company’s structure carefully before investing, understand your goals and time horizon. The Brazilian stock market has options for every type of investor; just know what you’re looking for.