Dividend Enhanced Convertible Stock - DECS

DEFINITION of 'Dividend Enhanced Convertible Stock - DECS'

Preferred stock that provides the holder with premium dividends in addition to an embedded short put option and a long call on the issuing company's stock.

BREAKING DOWN 'Dividend Enhanced Convertible Stock - DECS'

Dividend enhanced convertible stocks provide the holder with the right to convert the security into the underlying company's common stock.

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RELATED FAQS
  1. Why do some investors prefer convertible over “straight” bonds?

  2. What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
  3. Can preferred stocks be traded like common stocks? Are their prices the same?

    First, let's look at the differences and similarities between common stocks and preferred stocks. Both represent a piece ... Read Answer >>
  4. How do I use a premium put convertible?

    Holders of convertible bonds face all the pitfalls that traditional bondholders face - liquidity risk, interest rate risk ... Read Answer >>
  5. How do dividends affect retained earnings?

    Find out how distribution of dividends affects a company's retained earnings, including the difference between cash dividends ... Read Answer >>
  6. What is the difference between convertible and reverse convertible bonds?

    The difference between a regular convertible bond and a reverse convertible bond is the options attached to the bond. While ... Read Answer >>
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