Preferred Stock

Preferred stock is a special class of stock issued by a company that pays dividends. Preferred stock is more like a bond than true stock because the main appeal is dividend income. Most are limited in the total profit they can earn. Some of these stocks can be tied to certain projects a company offers and can be less like traditional preferred stocks.

Further explanation of Preferred Stock:

There are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation. In general, these types of stocks can be a good balance between the pros and cons of bonds and common stocks.

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