Preferred Stock

Preferred stock refers to a class of ownership in a company that grants shareholders certain preferential rights and privileges compared to common shareholders. Preferred shareholders have higher priority when it comes to receiving distributions, such as dividends, ahead of common shareholders. They are entitled to fixed dividends, which are typically predetermined and must be paid before any dividends can be distributed to common shareholders. However, preferred shareholders often have limited or no voting rights in corporate decision-making processes. Preferred stock combines features of both equity and debt, offering investors a hybrid form of ownership in a company.