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Preferred Shares |
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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. Preferred Stock Stock in a publicly-traded company without voting rights, but otherwise with more rights than common shares. Preferred stocks receive dividends before common shares and sometimes have guaranteed dividends, while common shares only receive the leftovers. Preferred stocks also have a prior claim on capital in the event of liquidation; if the company is liquidated, all preferred shareholders must be paid off before a single common shareholder. Some preferred stocks 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 stocks tend not to appreciate as fast as common stocks. 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: Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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