Preferred Dividend

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DEFINITION of 'Preferred Dividend'

A dividend that is accrued and paid on a company's preferred shares. In the event that a company is unable to pay all dividends, claims to preferred dividends take precedence over claims to dividends that are paid on common shares.

BREAKING DOWN 'Preferred Dividend'

Preferred stock will typically pay much higher dividend rates than common stock of the same company. This is the main benefit of owning preferred shares.

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