PreferredStockCentral

Preferred Stock Information Page


Preferred Stock represents ownership in a corporation that has preferential
treatment in terms of liquidation and dividend than common stock. Preferred
Stock have traits from both equity and debt. Below are some of the positives
and negatives of investing in preferred stocks.

Positives:

1)   Unlike debt preferred stock of large public companies are exchanged traded.
 
2)   Most preferred stock pay quarterly dividend at a set rate.
 
3)   Convertible preferred allows for participation of appreciation of common
        shares by allowing the preferred to convert to common at a set rate.
 
4)   Preferred stock has liquidation preference in a liquidation event over
        common stock
 
5)   Dividend preference over common shares

Negatives:

1)   Many preferred issues have very low volume and have wide bid ask spread.
 
2)   Risk of default and loss of principle.
 
3)   Risk of board not declaring the dividend.
 
4)   Limited voting rights, which only apply in special circumstances.
 
5)   Preferred stock are below debt in terms of liquidation preference there is a
       risk that company will issue more debt and lower your standing in terms
       of liquidation preference.
 
Each individual company’s preferred stock have different terms you should read
the prospectus for details. We have highlight the important terms of some preferred
issuance in our database.