Do preferred stock shareholders pay dividends before common stock shareholders?

As mentioned, preferred stock shareholders are paid their dividends before common stock shareholders (who may or may not receive dividends). If a company misses a dividend payment, it must first pay any arrears to preferred stock shareholders before paying common stock shareholders.

What is the difference between preferred stock and common stock?

Preferred stock usually confers no voting rights to shareholders while common stock does. Common stock shareholders are last in line when it comes to company assets, which means they will be paid after creditors, bondholders, and preferred stock shareholders. Preferred stock is less volatile than common stock and is callable.

What is a preferred stock dividend?

The dividends for preferred stocks are by definition determined in advance and paid out before any dividend for the company's common stock is determined. The dividend may be a set percentage or may be tied to a particular benchmark interest rate. The dividend is generally paid on a quarterly or annual basis.