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Learn more about Preferred Stocks
 

Preferred stocks have been issued since the start of modern investing. While institutional investors are very familiar with Preferred Stocks many individual investors are not. The primary reason is that individual investors never had access to the data and tools to ex-dividend calendar search and screen Preferred Stocks.

Preferred-Stock.com provides clients the data and tools to make intelligent investment decisions with Preferred Stocks. Preferred Stocks have recently gained market attention, in part due to the volatility in the common stock market, but also to the baby boomers seeking higher yielding investments. In fact the US Government has taken billions of dollars of Preferred Stock positions in many of the US financial institutions.

Preferred Stocks are part common stock and part bond. Preferred stocks are issued in market sectors such as utilities, real estate investment trusts, industrials, financials, conglomerates and others. Preferred Stocks trade on major stock exchanges such as the NYSE® and NASDAQ®. Like common stocks, preferred stocks are legally a form of equity and are treated as equity on a company’s balance sheet. Owners of preferred and common stock are viewed as owners although Preferred Stock shareholders usually don’t have the voting rights that common shareholders have.

Preferred stocks are considered preferred primarily for two reasons:

  1. Preferred shareholders are paid dividends ahead of common shareholders. A company cannot pay any dividends to common shareholders while payments are owed to the preferred shareholders.
  2. Preferred shareholders in the event of bankruptcy or liquidation are paid before common shareholders.

Just like bonds, preferred stock is issued by corporations to raise capital. Preferred stocks are issued at a par value, usually $25 and have a fixed interest rate normally paid quarterly. Preferred stocks are like bonds in that they have a fixed interest rate, so they will pay shareholders the same amount year after year.

Just like common stocks, preferred stocks have a share price and it usually issued at a par value of $25. The preferred stock share price fluctuates. If a preferred stock that is issued at $25 and has an initial interest rate/yield of 10% and the share price increases/decreases then the interest rate/yield will increase and decrease along with the stock price. Preferred-Stock.com updates the interest rate/yields daily so you are kept up to date with the latest preferred stock data.

Dividend payments for Preferred stocks are cumulative. Meaning if a company misses a dividend payment then that amount accrues. If and when the company is able to resume payments, it must pay all that it owes in dividends along with the current dividend payment.

Some Key Advantages to Preferred Stocks:

Preferred stocks normally pay higher interest rates/yields than common stocks, providing a higher income stream to investors.

  1. Preferred stocks pay fixed dividend payments. Decreasing or eliminating the common stock dividend does not mean that the preferred stock dividend will be decreased or eliminated.
  2. Preferred stock price fluctuation is normally less volatile than the common stock share price.
  3. In the event of bankruptcy Preferred Stock shareholders are paid before common stock shareholders.

Some Key Disadvantages to Preferred Stocks:

  1. Common stocks can grow in value over time leading to large capital gains.
  2. Preferred stocks have little room for capital appreciation so owners of Preferred stocks are not normally seeking capital gains they are seeking income.
  3. The owners of Preferred stocks can lose money just the same as Common stocks
  4. Preferred shareholders are ahead of common shareholders but behind bondholders.

Preferred-Stock.com provides fundamental Preferred Stock data for Preferred Stocks that are trading on the NYSE®, NASDAQ®, AMEX®, OTCBB®, TSX® and TSXV® stock exchanges. As a member, you also obtain immediate access to our proprietary tools which enable you to locate preferred stock data such as:

  • Web’s largest database of Preferred Stocks
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  • Web’s best Preferred Stock Ex-Dividend Calendar
 
 
 
 
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