Preferred Stock
Preferred stock is similar to common stock, or equity in the company, but it is typically reserved for investors and comes with additional rights and protections often resulting in a higher value than common shares.
What is preferred stock?
Preferred stock is a type of stock that generally has a higher claim on a company's assets and earnings than common stock. Preferred shareholders have priority over common shareholders in the event of a liquidation, and they also typically receive a fixed dividend.
How is preferred stock different from common stock?
Preferred stock typically has a fixed dividend and priority over common stock in the event of a liquidation, while common stock typically has the potential for higher growth in value but no fixed dividend, and holders of common stock only receive assets and dividends after the preferred stockholders have been paid.
What is the difference between cumulative and non-cumulative preferred stock?
Cumulative preferred stock means that if a company misses a dividend payment, they must make up for it later. Non-cumulative preferred stock means that if a company misses a dividend payment, the shareholder does not receive that missed payment in the future.
