What does preferred stock mean?

Preferred stock is a type of stock that represents ownership in a company, but has different characteristics than common stock. It is considered a hybrid security, as it has both equity and debt-like features. Preferred stockholders have a higher claim on the company's assets and earnings than common stockholders. In the event of bankruptcy or liquidation, preferred stockholders are paid before common stockholders. They also have a fixed dividend rate, which is typically higher than the dividend paid to common stockholders. Furthermore, preferred stockholders do not usually have voting rights in the company, which means they do not have a say in the company's management or decision-making processes. However, in some cases, preferred stock may have voting rights if the company fails to pay dividends for a certain period of time. Overall, preferred stock is an attractive investment option for those seeking a steady income stream, as it offers a fixed dividend and higher priority in the event of a company's financial distress. However, it also carries certain risks, such as interest rate risk and call risk, which investors should consider before investing in preferred stock.