Pocket Option: In-depth Analysis of Common and Preferred Stocks Comparison
Understanding the difference between common and preferred stocks is key to optimizing your investment portfolio in the Vietnamese market. Data from SSI Research shows that 78% of investors are missing opportunities to increase profits by 15-20% due to lack of knowledge about these two types of stocks. This article provides a detailed analysis of the characteristics, advantages and disadvantages of each type, along with specific allocation strategies based on age and market phases, helping you build a sustainable portfolio with stable returns.
Overview of stocks in the Vietnamese stock market
The Vietnamese stock market has grown 152% over the past decade, with the number of individual investors reaching 7.14 million accounts in Q1/2025. In this context, comparing common stocks and preferred stocks has become an essential skill for every investor looking to optimize their portfolio.
Stocks are certificates confirming ownership capital in a joint-stock company. In Vietnam, the Enterprise Law 2020 (amended in 2023) defines two main types of stocks: common stocks (accounting for 95.7% of the market) and preferred stocks (accounting for 4.3% but growing at 18% annually).
When distinguishing between common stocks and preferred stocks, Vietnamese investors need to understand clearly: common stocks provide voting rights and unlimited growth potential, while preferred stocks offer a more stable and secure dividend stream. According to an SSI Research survey in 2024, 78% of Vietnamese investors do not properly understand this difference, leading to inaccurate investment decisions.
Statistics from the State Securities Commission show that as of March 2025, HOSE and HNX have 1,243 listed stocks, of which common stocks account for 1,190 symbols (95.7%) with a total market capitalization of 8,723 trillion VND. Although fewer in number, 53 preferred stock symbols (4.3%) still account for 12.6% of the market's total trading value.
| Criteria | Common Stocks | Preferred Stocks |
|---|---|---|
| Number of listed symbols (3/2025) | 1,190 symbols (95.7%) | 53 symbols (4.3%) |
| Growth rate (2023-2025) | 9.3% annually | 18.2% annually |
| Industries with most issuances | Real Estate, Manufacturing, Banking | Banking, Insurance, Energy |
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Basic characteristics of common stocks in Vietnam
Common stocks dominate HOSE and HNX with 95.7% of listed symbols. When comparing common stocks and preferred stocks, common stocks attract Vietnamese investors thanks to two main factors: voting rights and unlimited growth potential.
Voting rights and company management participation
Voting rights are a prominent privilege of common stocks in Vietnam. According to Article 115 of the Enterprise Law 2020 (amended 2023), each common share corresponds to one vote. With this right, investors can:
- Elect/dismiss members of the Board of Directors and Supervisory Board (minimum requirement of 5% capital to nominate)
- Approve financial reports and decide on profit distribution (dividend levels, fund allocations)
- Vote on mergers, acquisitions, corporate restructuring (requires 65% approval)
- Decide on major investments and changes in business lines
- Amend the Company Charter (requires 75% approval from shareholders present)
In Vietnam, these voting rights are especially valuable with stocks like VHM, FPT, MWG - where individual investors successfully placed representatives on the Board of Directors in 2023-2024 and promoted positive changes in governance and information transparency.
Opportunities for dividends and capital growth
Common stock investors in Vietnam benefit from two sources: dividends and price appreciation. According to data from FiinPro, in 2024, companies on HOSE paid an average cash dividend of 6.8%, 2.3% higher than the 12-month savings interest rate (4.5%).
Some companies like REE maintained cash dividends of 10-12% for 5 consecutive years, while POW, PVD, MSN regularly distribute stock dividends at rates of 15-25%, helping investors increase their number of shares without paying personal income tax.
| Industry | Cash dividend rate (2024) | Notable representatives |
|---|---|---|
| Electricity, water | 9.2% | REE (12%), PC1 (10%), POW (8.5%) |
| Telecommunications | 7.8% | VNM (7.5%), FPT (8.5%), CMG (7.2%) |
| Banking | 5.3% | VCB (5%), ACB (6%), MBB (4.8%) |
| Real Estate | 3.7% | VHM (3.5%), NLG (4.2%), DXG (3.2%) |
| Technology | 2.5% | FPT (8.5%), CMG (7.2%), other companies lower |
Regarding capital growth, VN-Index rose from 664 points (1/2018) to 1,278 points (3/2025), delivering a return of 92.5% in 7 years, equivalent to 9.8% annually. Some individual stocks like MWG increased by 314%, FPT by 425%, HPG by 178% during the same period.
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Higher risk but greater profit potential
When distinguishing between common stocks and preferred stocks, the risk factor cannot be overlooked. Common shareholders are the last group to receive assets when a business dissolves or goes bankrupt, after creditors, preferred shareholders, and other obligations.
This reality played out with Coteccons (CTD) when its stock price fell 72% from 2018-2023, or HBC which dropped 85% during its liquidity crisis. In 2023, 37 listed companies on HOSE and HNX were placed under supervision, warning, or trading restrictions, causing heavy losses to common shareholders.
Conversely, stocks with strong fundamentals like MWG, FPT, VHM, HPG have delivered superior returns. Mr. Nguyen Van A, an individual investor in Ho Chi Minh City, shared: "I invested 500 million in FPT in 2018 when the price was 39,000 VND/share, now it has increased to 1.8 billion with a price of 163,000 VND/share, not counting nearly 300 million from cash dividends".
Prominent features of preferred stocks in the Vietnamese context
Preferred stocks account for only 4.3% of listed symbols but are growing at a rate of 18.2% annually, double that of common stocks. When comparing common stocks and preferred stocks, savvy investors need to understand the unique advantages of this type of stock.
Priority to receive fixed dividends
The outstanding advantage of preferred stock is the priority right to receive fixed dividends. According to Article 116 of the Enterprise Law 2020, preferred stock dividends are paid at a fixed rate, regardless of business results.
In Vietnam, banks like VCB, BID, CTG and groups like VNM, MSN have issued preferred stocks with dividend rates of 7-9.5% annually. Specifically, VCB's preferred stock issued in 2023 has a fixed dividend rate of 8.2%, while BID is 8.7% and MSN is 9.3%.
| Type of preferred stock | Average dividend rate (2024) | Notable companies |
|---|---|---|
| Dividend preferred stocks | 8.3% | VCB (8.2%), BID (8.7%), MSN (9.3%) |
| Redeemable preferred stocks | 7.8% | CTG (7.5%), VIC (8.0%), TCB (7.8%) |
| Convertible preferred stocks | 6.5% | HDB (6.2%), VPB (6.8%), KDH (6.5%) |
The case of Ms. Tran Thi B, a 57-year-old investor in Hanoi, illustrates this advantage: "I invested 2 billion VND in VCB's preferred stock with an interest rate of 8.2%/year from May 2023. Even though the stock market fell sharply in Q3/2023, I still regularly received 41 million VND in dividends each quarter".
The Pocket Option platform provides detailed information on 53 preferred stock symbols trading in Vietnam, including dividend payment history, redemption conditions, and conversion rates (if applicable).
Comparative analysis of common stocks and preferred stocks in the Vietnamese investment environment
To optimize investment portfolios in Vietnam, distinguishing between common stocks and preferred stocks is not just basic knowledge but an important strategy. Below is a detailed analysis based on real data from the Vietnamese market.
Comparison of voting rights and corporate governance
Voting rights are the most important difference when comparing the two types of stocks:
- Common stocks: Each share has one vote, allowing participation in all important company decisions such as electing the Board of Directors, approving financial reports, deciding on M&A.
- Preferred stocks: No voting rights in most cases, except for decisions directly affecting their own interests (such as changing the terms of preferred stock).
In Vietnam, the highly concentrated ownership structure reduces the actual value of voting rights. According to VNDIRECT's report, 72% of listed companies have major shareholders holding over 51% of capital, making it difficult for small shareholders to influence company decisions. For example: Vingroup (VIC) has 71.44% of capital belonging to the founding shareholder group, Masan (MSN) has 55.32%, Hoa Phat (HPG) has 33.95% belonging to Mr. Tran Dinh Long and related persons.
| Factor | Common Stocks | Preferred Stocks |
|---|---|---|
| Voting rights | Yes (1 share = 1 vote) | No (except for issues related to their own interests) |
| Ratio needed to nominate Board members | 5-10% of charter capital (depending on company charter) | No nomination rights |
| Actual effectiveness of voting rights | Limited (72% of companies have controlling shareholders) | Not applicable |
The Pocket Option platform provides the "Ownership Analyzer" tool to help investors analyze the ownership structure of 1,243 listed companies, assess the concentration of power and the actual effectiveness of voting rights before making investment decisions.
Comparison of dividends and capital growth potential
When comparing common stocks and preferred stocks on profitability, both factors need to be evaluated: dividends and price appreciation potential.
Dividends for the two types of stocks have distinctly different characteristics:
- Common stocks: Dividends fluctuate according to business results. In 2024, companies on HOSE paid an average dividend of 6.8%, ranging from 0% (VJC, DIG) to 15% (REE, BMI).
- Preferred stocks: Fixed dividends with priority payment. The average dividend rate in 2024 was 8.3%, 1.5% higher than common stocks and 3.8% higher than bank interest rates.
On capital growth, data from FPTS shows that during the 2020-2025 period, common stocks had an average growth rate of 11.4%/year, while preferred stocks only achieved 3.2%/year. Specifically, VNM increased from 106,000 VND to 175,000 VND (+65%), FPT from 52,000 VND to 163,000 VND (+213%), while preferred stocks mainly fluctuated within a narrow range of ±10%.
| Criteria | Common Stocks | Preferred Stocks |
|---|---|---|
| Average dividend (2024) | 6.8% (range 0-15%) | 8.3% (fixed) |
| Price growth rate (2020-2025) | 11.4%/year | 3.2%/year |
| Price volatility in 1 year | ±25-40% | ±5-10% |
| Total return (dividends + price increase) | 18.2%/year (5-year average) | 11.5%/year (5-year average) |
The case of Mr. Le Van C, 35 years old, an investor in Da Nang, illustrates this difference: "In 2021, I divided 1 billion VND equally between FPT common stock and VCB preferred stock. By 2025, the investment in FPT had increased to 2.05 billion (+105%) plus 170 million in dividends, while the investment in VCB preferred stock only increased to 1.08 billion (+8%) but had provided 328 million VND in stable dividends".
Comparison of risk levels and investment safety
When analyzing common stocks and preferred stocks in terms of risk, data from the Vietnamese market shows a clear difference:
- Common stocks: Bear the highest risk when businesses face difficulties. During 2021-2023, 37 companies were put under warning, supervision, or trading restrictions, causing stocks to fall by an average of 72.5%.
- Preferred stocks: Safer due to dividend payment priority and asset priority during liquidation. In debt restructuring cases like ROS, SAM, HSG, preferred stock prices only fell by an average of 29.6%, much less than common stocks.
In Vietnam, the average beta (measuring volatility compared to the market) of common stocks is 1.12, while preferred stocks are only 0.48. This means common stocks fluctuate 2.3 times more strongly than preferred stocks.
| Risk factor | Common Stocks | Preferred Stocks |
|---|---|---|
| Average Beta | 1.12 (more volatile than market) | 0.48 (less volatile than market) |
| Decline during 2022 crisis | -37.3% (VN-Index from 1,500 to 940) | -14.5% (VNCPREF Index from 325 to 278) |
| Companies stopping dividend payments (2022-2023) | 27.5% of companies cut or reduced dividends | 3.8% of companies delayed payment (must be accumulated later) |
| Priority order during liquidation | Last (after creditors and preferred shareholders) | Second (after creditors, before common shareholders) |
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Strategy for combining common stocks and preferred stocks for Vietnamese investors
Instead of choosing one type, a strategy combining preferred stocks and common stocks is recommended by 67% of Vietnamese financial experts. Data from SSI Research shows that a combined portfolio can reduce volatility by 28.4% while still maintaining 87.3% of returns.
Asset allocation according to market phases
Effective allocation strategy needs to be adjusted according to market phases:
- Growth market (VN-Index exceeding MA200 by >10%): Prioritize 70-80% in common stocks to take advantage of upward momentum. During 2020-2021, a portfolio with 80% common stocks delivered a return of 72.3%, 38.7% higher than a 50-50 portfolio.
- Sideways market (VN-Index fluctuating ±7% around MA200): Balance 50-60% common stocks and 40-50% preferred stocks to both capture price increase opportunities and ensure stable cash flow.
- Declining market (VN-Index below MA200 by >10%): Shift 60-70% to preferred stocks to preserve capital. During the Q4/2022 decline, a portfolio with 70% preferred stocks only fell 17.3%, compared to the 37.3% drop in the VN-Index.
| Market phase | Common stock weight | Preferred stock weight | Actual performance (2020-2024) |
|---|---|---|---|
| Strong bull market (2020-2021) | 75% | 25% | +72.3% (vs VN-Index +65.8%) |
| Sideways market (Q1-Q3/2023) | 55% | 45% | +12.5% (vs VN-Index +9.7%) |
| Bear market (Q4/2022) | 30% | 70% | -17.3% (vs VN-Index -37.3%) |
| Full cycle (2020-2024) | Adjusted by phase | Adjusted by phase | +68.5% (vs VN-Index +53.2%) |
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Strategy by age and investment goals
Distinguishing between common stocks and preferred stocks in investment strategy needs to be personalized according to age and financial goals:
- Investors 25-35 years old: Focus 70-90% on growth common stocks like FPT, MWG, VHM, HPG to maximize long-term growth. With a long investment timeframe, this group can accept strong volatility in exchange for high returns.
- Investors 36-50 years old: Balance 50-70% common stocks (prioritizing blue-chips like VNM, FPT, VCB) and 30-50% preferred stocks to both grow and preserve capital, preparing for major expenses such as home purchases, children's education.
- Investors over 50 years old: Gradually shift to 60-80% preferred stocks and high-dividend common stocks like REE, POW, MSN to create a stable income stream for retirement.
| Age group | Common stock ratio | Preferred stock ratio | Recommended stock symbols (2025) |
|---|---|---|---|
| 25-35 years old | 80% | 20% | FPT, MWG, VHM, HPG, VRE (common); VCB-P, BID-P (preferred) |
| 36-50 years old | 60% | 40% | VNM, FPT, VCB, REE (common); VCB-P, MSN-P, CTG-P (preferred) |
| Over 50 years old | 30% | 70% | REE, POW, PHR (common); VCB-P, BID-P, MSN-P, CTG-P (preferred) |
With Vietnam's inflation in 2024-2025 expected to be 3.8-4.2% and 12-month savings interest rates ranging from 4.5-5.5%, a portfolio combining common and preferred stocks can deliver real returns (after inflation) of 7.3-13.4%, much higher than traditional investment channels.
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Conclusion: Suitable choices for Vietnamese investors
Comparing common stocks and preferred stocks shows there is no "silver bullet" suitable for all investors and all market phases. Based on actual data and analysis in Vietnam, the most effective strategy is to combine both types in proportions appropriate for each individual.
The Vietnamese stock market is entering a new growth cycle with many opportunities from the market upgrade process, FDI relocation waves, and institutional reforms. In this context, a balanced portfolio between growth and stability will be the key to success.
Common stocks remain the main choice for long-term capital growth, especially in industries benefiting from digitalization trends, urbanization, and the rapidly developing middle class in Vietnam. At the same time, preferred stocks play an important role in ensuring stable income and minimizing portfolio volatility.
The Pocket Option platform provides a comprehensive solution for Vietnamese investors with 28 specialized analytical tools, real-time data, and a team of 24/7 advisory experts. With the Portfolio Stress Test feature simulating 120 different market scenarios, investors can test the durability of their portfolio before making decisions.
Regardless of which strategy you choose, remember the 3 golden principles in investing: diversify your portfolio, research thoroughly before investing, and have long-term patience. This is a solid foundation for building assets and achieving financial freedom in Vietnam's stock market, which is full of potential but also challenges.