Preference Shares

AAA

DEFINITION of 'Preference Shares'

Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a company bankruptcy, preferred stock shareholders have a right to be paid company assets first. Preference shares typically pay a fixed dividend, whereas common stocks do not. And unlike common shareholders, preference share shareholders usually do not have voting rights.


Also referred to as preferred stock.

INVESTOPEDIA EXPLAINS 'Preference Shares'

There are four types of preference shares: Cumulative preferred, for which dividends must be paid including skipped dividends; non-cumulative preferred, for which skipped dividends are not included; participating preferred, which give the holder dividends plus extra earnings based on certain conditions; and convertible, which can be exchanged for a specified number of shares of common stock.

RELATED TERMS
  1. Current Dividend Preference

    A safety feature of preferred shares, whereby holders of such ...
  2. Contingent Shares

    Shares of company stock that are issued only if certain conditions ...
  3. Preference Equity Redemption Cumulative ...

    A convertible preferred stock with an enhanced dividend that ...
  4. Common Stock

    A security that represents ownership in a corporation. Holders ...
  5. Preferred Stock

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

    A dividend that is accrued and paid on a company's preferred ...
Related Articles
  1. A Primer On Preferred Stocks
    Bonds & Fixed Income

    A Primer On Preferred Stocks

  2. Introduction To Convertible Preferred ...
    Bonds & Fixed Income

    Introduction To Convertible Preferred ...

  3. Utility Funds: A Bright Choice In Bear ...
    Mutual Funds & ETFs

    Utility Funds: A Bright Choice In Bear ...

  4. Income Funds 101
    Mutual Funds & ETFs

    Income Funds 101

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center