Often the corporation, when paying property dividends, will use securities of other companies owned by the issuer. This concludes our look at common stock. Read below to learn about preferred stock ownership. Preferred stock promises guaranteed dividends and a claim on a company's assets that is above that of common shareholders. The tradeoff may be that preferred shareholders cannot vote or share other specified rights.
Preferred stock pays a fixed dividend that is specified and set down in advance.
Unless the stock is retired or called back, it will continue paying dividends forever. The dividend payments are a fixed percentage of the par. In recent years, some companies have also begun issuing preferred shares with variable rates tied to interest rates. The par value is the most that the shareholder will receive if the company declares bankruptcy. Preferred stock is generally issued at its par value.