preferred shares


Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preferred shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, a preferred share pays a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so.
The main benefit to owning preferred share is that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred, non-cumulative, participating, and convertible. also called preferred stock.

For more information see Common Stock vs. Preferred Stock, and Stock Classes at

Use preferred shares in a sentence

You should try to make sure that you are getting the preferred shares when you are making the big buy.

​ Was this Helpful? YES  NO 10 people found this helpful.

There were a lot of preferred shares and were paid to common stock holders and I was one of those guys.

​ Was this Helpful? YES  NO 7 people found this helpful.

He had a thousand preferred shares in Subaru and he felt very secure in the knowledge that he was essentially getting paid first when good luck arose for them.

​ Was this Helpful? YES  NO 8 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
cumulative dividend preferred dividend coverage