Angie · learn
Preferred stock
A share with a fixed dividend and priority over common stock, usually without a vote. It behaves more like a bond than like equity.
Updated 2026-09-05
Preferred stock sits between debt and equity. It pays a fixed dividend, ranks ahead of common stock for both dividends and liquidation, and usually carries no vote.
In practice it behaves far more like a bond than like a share. Its price moves mainly with interest rates rather than with company performance, because the payment is fixed and the upside is capped. What you are buying is an income stream with slightly more risk than a bond and slightly better priority than common equity.
See also
- Stock — A unit of ownership in a company. It carries a vote, a claim on whatever is left after everyone else is paid, and no promise of anything.
- Bond — A loan to a company or government, repaid on a fixed schedule with interest. You are a creditor, not an owner, and you get paid before shareholders.
- Dividend — Cash paid out to shareholders. It is a decision about what to do with free cash flow, not a measure of how much of it there is.
- Liquidation order — Who gets paid when a company fails: secured creditors, then unsecured, then subordinated debt, then preferred, then common. Shareholders are last and usually get nothing.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
