Preferred Stock (Equity)
Preferred stock (equity) is a type of security that has properties of both equity and debt. Preferred stockholders have a higher claim on assets and earnings than common stockholders, but they do not have voting rights. Preferred stockholders are paid a fixed dividend, which is usually higher than the dividend paid to common stockholders. Preferred stock is generally less volatile than common stock, and it is often used as a form of long-term financing for companies.
History of Preferred Stock
Preferred stock has been around since the late 19th century. It was first used by railroad companies as a way to raise capital for expansion. The first preferred stock was issued by the Pennsylvania Railroad in 1875. Since then, preferred stock has become a popular form of financing for companies of all sizes. It is often used by companies to raise capital for expansion, acquisitions, and other investments.
Comparison of Preferred Stock and Common Stock
| Preferred Stock | Common Stock |
|---|---|
| Higher claim on assets and earnings | Lower claim on assets and earnings |
| Fixed dividend | Variable dividend |
| No voting rights | Voting rights |
| Less volatile | More volatile |
Summary
Preferred stock (equity) is a type of security that has properties of both equity and debt. Preferred stockholders have a higher claim on assets and earnings than common stockholders, but they do not have voting rights. Preferred stockholders are paid a fixed dividend, which is usually higher than the dividend paid to common stockholders. Preferred stock is generally less volatile than common stock, and it is often used as a form of long-term financing for companies. For more information about preferred stock, you can visit Investopedia, The Balance, and other financial websites.
See Also
- Common Stock
- Dividend
- Equity
- Debt
- Voting Rights
- Volatility
- Long-Term Financing
- Investopedia
- The Balance
- Financial Websites
