WHAT ARE PREFERRED AND REIT STOCKS, I KNOW WHAT BONDS AND COMMON STOCKS ARE?
Hundreds of companies today are issuing preferred shares that are senior debt obligations of the companys common and these have “fixed contracted” dividends. The dividend will not be hiked or lowered for the full term of the security. Debt rating agencies count these as equity capital of the company, rather than bond debt. Preferreds will not appreciate above their par values of typically $25 per unit or share, so one does not get share price growth. In exchange for giving up the potential of share price growth, the investor gets a senior quality security, a fixed distribution rate, cumulative rights to dividends and most importantly a dividend yield that is substantially above most common stock dividends.
