The remainder earnings available for distribution is shared by both preferred and common stockholders. If a preferred stock issue lacks the participation feature, the preferred stockholders receive only the regular dividends and any excess dividend is paid to the common stockholders. The Conversion Feature of Preferred Stock Convertible Preferred Stock is preferred stock that can be exchanged, at the stockholder's option, for a specified number of shares of common stock. The conversion feature provides the investor the safety of preferred stock, and the possibility of greater speculative gain through conversion to common stock. A wealth of information is available to stock investors, including newspapers and business periodicals, corporate reports, and investor services.
Most local newspapers carry several pages of business news.
An income stock is a stock that pays higher than average dividends . To be able to pay above-average dividends, a corporation must have a steady, predictable source of income. A growth stock is a stock issued by a corporation earning profits above the average profits of all the firms in the economy. Key factors to evaluate when choosing a growth stock include an expanding product line of quality merchandise and an effective research and development department. A cyclical stock is a stock that follows a business cycle of advances and declines in the economy.