What is “Preferred Stock”?
Preferred stock typically entitles its shareholders to priority over other stock in the distribution of profits. Frequently, preferred stock entitles its holders to dividends of a specified amount each year, which must be paid before common stock, dividends, if any, are paid. Preferred stockholders typically surrender voting rights in return for priority in dividend payout. However, they may obtain voting rights by deferring their dividends. These dividends, in turn, will accrue, adding to the overall outstanding debt of the company.
42.1 Preferred Stock typically entitles its shareholders to priority over other stock in the distribution of profits. 42.2 Frequently, preferred stock entitles its holders to dividends of a specified amount each year which must be paid before common stock dividends, if any, are paid. 42.3 Preferred stockholders typically surrender voting rights in return for priority in dividend payout. However, they may obtain voting rights by deferring their dividends. These dividends, in turn, will accrue, adding to the overall outstanding debt of the company.
