Guaranteed Stock

AAA

DEFINITION of 'Guaranteed Stock'

An infrequently used form of common or preferred stock, whose dividends are guaranteed by a third party. Railroads and public utilities sometimes issue this kind of stock. The guaranteed dividend can increase the stock's price.


This can also refer to commonly purchased items that a company always keeps a supply of for customers to purchase.

INVESTOPEDIA EXPLAINS 'Guaranteed Stock'

A company cannot pay dividends unless it earns a profit. Since it can't guarantee that it will earn a profit, another company has to guarantee that it will pay the dividend.


By having guaranteed stock, a company can acquire an advantage over competitors who do not. However, it will face the costs associated with carrying a large amount of inventory.

RELATED TERMS
  1. Guaranteed Payments To Partners

    Payments that are guaranteed to be made to a partner irrespective ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Blue-Chip Stock

    Stock of a large, well-established and financially sound company ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  5. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  6. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
Related Articles
  1. Investing Basics

    Stock Basics Tutorial

    If you're new to the stock market and want the basics, this is the tutorial for you!
  2. Investing Basics

    The Power Of Dividend Growth

    Dividends may not seem exciting, but they can certainly be lucrative. Learn more here!
  3. Remember what category a stock falls under, and also how it compares to other stocks of the same group.
    Investing Basics

    The Alphabet Soup Of Stocks

    Are the countless stock categories leaving you puzzled? Here we help you sort through the confusion.
  4. Investing Basics

    How And Why Do Companies Pay Dividends?

    If a company decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments ...
  5. Fundamental Analysis

    Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."
  6. Investing

    Do I receive the posted dividend yield every quarter?

    First things first: a company with common stock that pays a dividend will typically distribute the dividend every quarter. However, the amount the company quotes is normally an annual figure. ...
  7. Taxes

    How are preferred stock dividends taxed?

    Discover the intriguing debt and equity characteristics of preferred stock, and learn about how preferred stock dividends are taxed.
  8. Curious about preferred shares? Here's what you should know about these bond-like instruments.
    Trading Strategies

    What You Need To Know About Preferred Stock

    Curious about preferred shares? Here's what you should know about these bond-like instruments.
  9. Investing

    What is the difference between preferred stock and common stock?

    Preferred and common stocks are different in two key aspects. First, preferred stockholders have a greater claim to a company's assets and earnings. This is true during the good times when the ...
  10. Investing

    Why do some preferred stocks have a higher yield than common stocks?

    Before we answer this question, let's just take a quick review of what a stock's yield is actually measuring.The yield is calculated by taking the stock's annual expected dividend and then dividing ...

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center