First, preferred stock will pay a stated dividend. This must normally be paid to preferred stock holders before any dividends can be paid to common stock holders. The other difference is that preferred shareholders are higher on the food chain, sort of speak. Let me explain. If a company goes bankrupt, there is an order in which the assets of the company are dispersed.
Preferred shareholders are a step above common stock owners.
Actually, common stock is on the bottom of the list. This is because stock is ownership, and the last to be paid are the owners. Even so, common stock ownership has proven to be the most profitable over time. The average stock has appreciated about 11 percent per year over time. There are no other investment vehicles that can boast anywhere near a similar return.