preferred stock

To appeal to investors who wish to be sure of receiving dividends regularly, many companies issue what is called preferred stock, or preference shares. This class of stock has a prior claim to dividends paid by the company and, usually,…

Preference shares are so called because they are entitled by the terms on which they are issued to payment of a dividend of a fixed amount (usually expressed as a percentage of their nominal value) before any dividend is paid to the ordinary shareholders. In…

Preferred stock has priority with respect to dividends and, if the corporation is dissolved, to the division of assets. Dividends on preferred stock usually are paid at a fixed rate and are often cumulated in the event the corporation finds it necessary to omit a…

…is done with common and preferred stock. While both forms of stock represent shares of ownership in a company, preferred stock usually has priority over common stock with respect to earnings and claims on assets in the event of liquidation. Preferred stock is usually cumulative—that is, the omission of dividends…