Preferred shares

Preferred shares

Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock.

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Preferred shares

In equities, shares in a publicly-traded company without voting rights, but otherwise with more rights than common shares. Preferred shares receive dividends before common shares — and sometimes have a guaranteed dividend, with common shares only receiving the leftovers. Preferred shares also have a prior claim on capital in the event of liquidation; that is, if the company is liquidated, all preferred shareholders must be paid off before a single common shareholder. Some preferred shares are convertible, which means they can be changed into common shares at a certain ratio so that even preferred shareholders without voting rights have the possibility of gaining them. Preferred shares tend not to appreciate as fast as common shares.