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.

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Preferred Stock

What Does Preferred Stock Mean?

A class of stock that has a priority claim on a company's assets and earnings over common stock. Preferred stockholders are paid dividends before common stockholders are, but preferred shares do not normally have voting rights. The characteristics of preferred stock are unique to each corporation. One way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as preferred shares.

Investopedia explains Preferred Stock

There are pros and cons with preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and may have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the drawback of having no voting rights as a shareholder.

Related Terms:
• Common Stock
• Dividend
• Dividend Yield
• Ex-Dividend
• Yield