What is a preferred stock?

Preference shares (preferred stock) are company stock with dividends that are paid to shareholders before common stock dividends are paid out. There are four types of preferred stock - cumulative (guaranteed), non-cumulative, participating and convertible.

Do preference shares have a dividend?

Most preference shares have a fixed dividend, while common stocks generally do not. Preferred stock shareholders also typically do not hold any voting rights, but common shareholders usually do. Preference shares (preferred stock) are company stock with dividends that are paid to shareholders before common stock dividends are paid out.

How do you calculate a preferred stock dividend?

For example, say that a preferred stock had a par value of $100 per share and paid an 8% dividend. To calculate the dividend, you would need to multiply 8% by $100 (the par value), which comes out to an annual dividend of $8 per share. If dividend payments are made quarterly, each payment will be $2 per share.