Preferred Stock

Preferred Stock

Preferred Stock is one of the two main types of stock. Generally, it has a higher priority with respect to the asset distribution in the company compared to the other ones – that’s why it is preferred.

There are two main scenarios where it exposes its advantages the most.

The first one is when the company needs to share the profit it earned during a certain period among the owners. In other words, distribute the dividends among the shareholders. In this case, the preferred stockholders will have higher priority and may have a higher yield and choose various payment options. 

The second one is when the company files for bankruptcy. In this case, the company owners will want to take back the money they invested in the company – proportionate to their share in the total capital. However, as the company filing for bankruptcy, naturally, has much fewer assets than it used to,  the total amount to be divided among the owners will be less than what it used to be, especially after the bondholders have their claims satisfied as to the highest priority. In other words, some of the shareholders may not receive their money back. Some, but not the preferred stockholders – this security gives a certain degree of reassurance through giving a higher priority on its owner’s claim.

Hence, the nature of preferred stock is a fusion of a bond and equity due to the higher level of guarantee on the outcomes in certain scenarios.

However, there is one disadvantage that balances that out – preferred stock usually do not have voting right. 


2020-07-24 • Updated

Deposit with your local payment systems

Learn more

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.


A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in 00:30:00

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera