If preferred stocks lived up to their name, everybody would own them.
Most investors don t know much about preferred stocks, and that s an indication of their popularity.
While technically recorded on a balance sheet as equity, preferred stocks share an equal amount in common with fixed income securities. Like a bond, preferred stocks pay its holder a fixed dividend each year. This dividend typically does not change, unlike a common stock dividend that can be increased or decreased at the Board s discretion. Also like a bond, preferred shareholders are not generally afforded voting rights. But many preferred issues can also be swapped for common shares, based on a predetermined ratio.