foxex: What is a 'Preferred Stock'?

Sunday, September 15, 2019

What is a 'Preferred Stock'?

The term "stock" refers to ownership or equity in a firm. There are two types of equity - common stock and preferred stock. Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders. The details of each preferred stock depend on the issue.

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.

Why Would a Company Issue Preferred Shares Instead of Common Shares?

Discover some reasons that corporations might issue preference or preferred shares, and why investors might value them more than common shares.

Understanding Convertible Preferred Shares

Convertible preferred share securities offer an answer for investors who want the profit potential of stocks but not the risk.

Related Definitions

Preferred Dividends

A preferred dividend is one that is accrued and paid on a company's preferred shares. Their dividend payments take preference over common shares.

Preference Shares

Preference shares are company stock with dividends that are paid to shareholders before common stock dividends are paid out.

Noncumulative

Noncumulative, as opposed to cumulative, refers to a type of preferred stock that does not pay the holder any unpaid or omitted dividends.

Cumulative Preferred Stock

Cumulative preferred stock has a provision that says if any dividends have been missed in the past, they must be paid out to preferred shareholders first.