Preferred Shares (Noun)
Meaning
Stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.
Classification
Nouns denoting possession and transfer of possession.
Examples
- Investors looking for regular income may consider purchasing preferred shares as part of their diversified portfolio.
- Preferred shares have a higher claim on assets and dividends than common shares, but their holders typically don't have voting rights.
- When a company goes bankrupt, holders of preferred shares are usually paid out before common shareholders, but after creditors.
- Issuing preferred shares allows a company to raise capital without giving up control, as the new shares typically don't carry voting rights.
- Unlike common shares, preferred shares typically offer a fixed dividend payment and no opportunity to benefit from an increase in the company's value.