Stock that entitles the holder to a fixed dividend, whose payment takes priority over that of common-stock dividends.
- Entitles the holder to a fixed dividend
- Preferred stockholders have a higher claim on distributions (e.g. dividends) than common stockholders.
- Preferred stockholders usually have no or limited, voting rights in corporate governance.
- In the event of a liquidation, preferred stockholders claim on assets is greater than common stockholders but less than bondholders.
- Preferred stock has characteristics of both bonds and common stock which enhances its appeal to certain investors.
- Preferred stock is easily bought through online brokerages such as Charles Schwab, TD Ameritrade, E-trade and many others.