What is preferred stock?

Preferred stock is a different type of equity that represents ownership of a company and the right to claim income from the company’s operations. Preferred stockholders have a higher claim on distributions (e.g., dividends) than common stockholders. Preferred stockholders usually have no or limited voting rights in corporate governance.

What is a preferred stock vs a common stock?

Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders. The details of each preferred stock depend on the issue. Preferred stock is a different type of equity that represents ownership of a company and the right to claim income from the company’s operations.

Are preferred stock shares a form of equity?

And like common stock, preferred shares represent a form of equity in the company. Importantly, preferred stock shares offer some privileges that are not available to those holding common stock shares. For example, preferred stockholders have a greater claim on assets in the event of a liquidation. They also have a greater claim on dividends.