preferred stock

Thân thiện

The investor reviews her portfolio of preferred stock.

Definition

Noun 1. A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock: Preferred stock represents an equity stake in a company, but it typically provides shareholders with a fixed dividend that must be paid before any dividends are paid to common stockholders. In the event of a company's liquidation, preferred shareholders have priority over common shareholders in receiving remaining assets.

Usage

Preferred stock is a financial instrument traded on exchanges. It is used to describe a specific, senior class of a company's equity. * The company issued preferred stock to raise capital without diluting the voting power of existing common shareholders. * Income-focused investors often buy preferred stock for its reliable dividend payments.

Advanced Usage

• "Cumulative preferred stock": A type of preferred stock where any missed dividend payments must be paid out to holders before any dividends can be paid to common stockholders.
  • The terms of the cumulative preferred stock ensured that all arrears were paid once the company returned to profitability.
• "Callable preferred stock": Preferred stock that the issuing company has the right to repurchase at a specified price after a set date.
  • The corporation decided to call its preferred stock to reduce its dividend obligations.

Variants and Related Words

• Preferred shares (n): A direct synonym for preferred stock.
• Preference shares (n): The term commonly used in British English for preferred stock.
• Common stock (n): A class of stock representing equity ownership with voting rights, but subordinate to preferred stock for dividends and assets.

Synonyms

• Senior equity: Highlights its priority claim over common stock.

Notes on Meaning

The core meaning of "preferred stock" centers on its priority status for dividends and assets and its general lack of voting rights, distinguishing it from common stock. It blends characteristics of both equity (stock) and debt (fixed dividends).

Học thuật

Noun

1. stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights

Từ đồng nghĩa

• preferred shares
• preference shares