Preferred Dividend

A preferred dividend is a cash payment that a company distributes to its preferred shareholders. It represents the dividend amount allocated to preferred shareholders based on their ownership of preferred stock. Preferred dividends generally have a higher dividend rate compared to dividends paid on the company’s common stock. Importantly, preferred dividends must be paid out to preferred shareholders before any dividends can be distributed to common shareholders. This ensures that preferred shareholders receive their entitled dividend before any residual profits are allocated to common shareholders.