What is Preferred Stock - A beginners Tutorial
A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to Common StockHolders and the shares usually do not have voting rights.
What are the advantages of preferred stocks?
1.Its existence increases the firm's financial leverage.
2.It is more flexible than debt when it comes to missing an annual payment.
3.It is useful for corporate restructuring.
What are the disadvantages of preferred stocks?
1.Its senior status to common stockholders jeopardizes common stockholders' returns.
2.Its cost is generally greater than that of debt financing.
3.It is sometimes difficult to sell since dividends can be passed (unpaid) and returns are generally fixed?
Preferred Stock Resources
Preferred Stock Investing by Doug K. Le Du teaches non-experts a simple method of investing in ""investment grade"" preferred stocks for annual returns that have averaged over 14% since January 2001 - and at ""CD-like"" risk.
Useful Links
The Many Flavors of Preferred Stock
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