Preferred stocks are securities with characteristics of both stocks and bonds. Like a bond, preferred stock has a fixed dividend that it will pay to owners each year. Also like a bond, preferred stock owners do not have the ability to vote on the management of a company. Lastly, because preferred stocks pay a fixed dividend, the value of a preferred share fluctuates more from changes in interest rates than from the actual performance of the company that issued the stock.
However, preferred stocks do not have a maturity date like bonds. Additionally, if a company fails to pay a …Read More