Preferred vs. Common Stock Made Simple

This Podcast presents the nuances between Common and Preferred Stock within the United States Exchanges.  The important elements are: Preferred stock will not provide the shareholder voting rights.  Preferred stock holders often do not attend the annual meeting because, they cannot vote on any agenda item according to the organization’s Bylaws.  The upside to holding Preferred stock, is that you can expect to gain monthly or annual dividends, as cited in your stock prospectus. (the legal document which states the terms and conditions on which shares and debentures have been issued.)

Preferred stock shareholders receive dividends well before the Common stock holders. There is less risk associated with owning Preferred Stock.

Common Stockholders are shareholders with voting rights, they often attend annual shareholders meetings and can cast their votes electronically or by paper ballot during the annual Stockholder meeting.  Common shareholders shape the Organization with their voting power and number of shares. Unfortunately, they only receive dividends at the discretion of the Organization or Company established Board of Directors approval.  Common stockholders are considered “last served,” when it comes to a company’s assets; simply put, the dividends are not distributed to Common Shareholders until after creditors, bondholders, and Preferred Shareholders have been paid. 

We hope this Podcast addresses some of your questions in a simple understandable manner.  Enjoy!