Preferred Stock is the type of stock that gives its owners preference in the payment of dividends and an earlier claim on assets than other stockholders if the company is forced out of business and its assets are sold.
Preferred shareholders have precedence over common shareholders with respect to dividends. Dividends are typically higher than common stock and can be paid monthly or quarterly. These dividends may be set in the form of fixed or benchmark interest rates such as the London Inter Bank Offered Rate (LIBOR). Often expressed as a percentage in the description of the emissions. Floating-rate shares determine certain factors that affect dividend yields, and participating shares may pay dividends on common stock or additional dividends calculated in relation to the companies.
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