What is a 'Preferred Stock'?

A class of ownership that has a higher claim on assets and earnings than common stock is preferred stock.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Preferred Stock A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights. Breaking it Down: Preferred shareholders have priority over common stockholders when it comes to dividends, which generally yield more than... Read More Related to "Preferred Stock" How Does Preferred Stock Work? Companies choose preferred stock for many reasons some being the flexibility of payments and easier to market. Learn the pros and cons of preferred stocks. Read More Why would a company issue preference shares instead of common shares? Learn about some reasons that corporations might issue preference shares, and why investors might value them more than common shares. Read More Introduction to Convertible Preferred Shares These securities offer an answer for investors who want the profit potential of stocks but not the risk. Read More Related Definitions Prior Preferred Stock A type of preferred stock with a higher claim on assets and dividends than other issues of preferred stock. Read More Preferred Stock ETF An exchange-traded fund that either tracks a preferred stock index or invests primarily in preferred shares. Read More Noncumulative A type of preferred stock that does not pay the holder any unpaid or omitted dividends. Read More Cumulative Preferred Stock A type of preferred stock with a provision that stipulates that if any dividends have been omitted in the past, they must be paid out to preferred shareholders first, before common shareholders can receive dividends. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: