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What is Prefered Stock?

Like common stock, preferred stocks represent partial ownership in a company, each share of preferred stock is normally paid a guaranteed, relatively high dividend and has first right over common stock at the company’s assets in the event of bankruptcy.

  • Preferred stock shareholders do not enjoy any of the voting rights of common stockholders.
  • Preferred stock may carry superior priority over common stock in the payment of dividends and upon liquidation.
  • Preferred stock may carry a dividend that is paid out prior to any dividends to common stock holders.
  • The main benefit to owning preferred stock is that the investor has a greater claim on the company’s assets than common stockholders.
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