Why do preferred stocks not follow the same standards as regular stocks?
Why are the symbols of preferred stocks different from brokerage houses and websites? Why do they not have the same symbol everywhere like a regular stock?
Also, many companies that have issued a preferred stock do not have that info on their website. Why is it not mandatory for all companies to display the same information for their preferred stocks like they do for their regular stock?
Preferred stocks do follow a consistent convention that generally includes the common stock ticker symbol plus a reference to the "series" of preferred stock. The confusion is that many different systems use a different structure to get a quote. For instance, to get a preferred stock quote on Yahoo, you will enter the ticker then "-P_" P for Preferred and the blank for the letter series of the preferred. Other systems will use a "." or "+" instead of the dash, and some may use "Pr" instead of the "P'. If you are looking for quotes online, you must use trial and error or a look up fucntion to discover the correct structure.
All companies must list all the securities in their equity structure in their SEC filings. You can find these in the annual report, 10K filing.
Keep in mind that Preferred stock sits between equity and debt on the balance sheet. Many preferred stocks pay attractive yields because they may have no maturity- you are loaning the company money in perpetuity. Additionally, the dividend payment is generally not required if there is any financial distress. Finally, in a bankruptcy situation, bond holders may potentially negotiate some return of their investment; preferred share holders in practice lose their entire investment- like stock holders.
While preferred stock has "stock" in its name it is often times and realistically an alternative to a traditional Bond issuance by the company. And preferred stock should be looked at as a "bond" vs. stock. Be careful in this area, unless the income floats with interest rates, you can get locked into what is in essence a tremendously long fixed bond that will react VERY unfavorably to higher interest rates (I.e. duration risk).
I completely understand the confusion, and you are not alone. The easiest answer is that preferred stocks have a higher claim on assets and earnings than common stocks, and before a common stock can receive a dividend, all preferred shareholders must receive a dividend - i.e. "preferred" status versus common stock shareholders.
As for preferred stocks themselves, they are much more like bonds than stocks with a "par value" ($25 is the most common par value), a set dividend, and potentially a call date - but not stock appreciation like common stocks. Unlike bonds though, preferred stocks may also be able to receive the qualified tax rate versus ordinary income on bonds, but be careful to research any particular preferred stock for that information. Also, preferred stocks generally have much less volatility than common stocks unless there is a major financial problem with the issuing company. The creditworthiness of the company will help determine the interest rate that the preferred stock can have. The riskier a company's financial situation is the higher the interest rate will be. Think of it like buying a car - if you have great credit, you get a great rate. If you do not, then you will pay a higher rate.
A great place that we go to get information on preferred stocks is www.quantumonline.com. In fact, I would suggest reading through their What Income Investors Should Know site - http://www.quantumonline.com/WhatIncomeInvestorsShouldKnow.cfm.
Preferred stocks can be a very good part of an overall portfolio allocation, but it is important to know and understand the specific preferred stock you are looking to purchase. Creditworthiness, potential call date, dividend rate, if it is a qualified dividend, etc. Will all play a very large part in if the particular preferred stock you are researching is a good buying opportunity.
I have often wondered why preferred stocks do not have an industry-standard nomenclature. This is something that brokerage firms should collaborate on to modernize, standardize, and clarify. A good suggestion is to know the CUSIP for the preferred stock you are trading. That is a 9-digit number that is universal across brokerage houses.
Take the Bank of America series L 7.25% perpetual preferred. The following are all tickers I have seen for it:
It's kind of a joke. But, the nice thing is that there's only one CUSIP for it, 060505682.
As to your question about disclosures, all companies are required to publish a prospectus for their preferred offerings. You can find these at the SEC EDGAR website. Whether to put the preferred securities on the company's website is up to the company as a strategic decision of how they want to portray themselves to the outside world. The legal statute does not require that they list preferred securities on their website, only that they make proper SEC filings and disclosures when they issue preferred stock.
And, speaking of disclosures:
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SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR
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