Preferred Stock
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Definition of 'Preferred Stock'A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as "preferred shares". |
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Investopedia explains 'Preferred Stock'There are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation.For more on this interesting hybrid security, read A Primer on Preferred Stocks and Valuation of Preferred Stocks. |
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A Primer On Preferred Stocks
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What Is The Difference Between Preferred Stock And Common Stock?
Most investors are familiar with common stock, but many know little about another form of company ownership: preferred stock. -
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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 ... -
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 of ownership in a company, and both are tools investors can use to try ... -
Does issuing preferred shares offer a tax advantage for corporations?
There is no direct tax advantage to the issuing of preferred shares when compared to other forms of financing such as common shares or debt. The reason for this is that preferred shares, which ... -
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