Preferred Stock
Preference Shares
A class of ownership that has priority over common stock in dividends and liquidation but typically lacks voting rights.
Preferred stock combines characteristics of debt and equity, providing fixed dividend payments like bonds but representing ownership stakes like common stock. Preferred shareholders receive dividends before common shareholders and have priority in liquidation scenarios. Preferred stocks may be cumulative (unpaid dividends accumulate) or non-cumulative, perpetual or with maturity dates, and callable or non-callable. Some preferred stocks have conversion features allowing exchange for common stock. They typically don't carry voting rights but may receive voting power in specific circumstances. Preferred stocks appeal to income-focused investors seeking higher yields than bonds with less volatility than common stocks, while providing companies with flexible financing that doesn't dilute common shareholder control.
Example
Bank of America preferred stock (BAC-PK), Berkshire Hathaway preferred shares