Stocks

Stocks
October 10, 2015
XACC/291

Stocks Many people wonder why preferred stock is referred to as preferred and what makes it more attractive to investors. Preferred stock shares are "preferred" because they have the preference over the common shares to receive dividends and company assets if the business is liquidated. If a company does not have enough cash to pay dividends to both the preferred shares and the common shares, the preferred shareholders must be paid first. Any Company or Corporation can issue two types of stock: Common and preferred. Common stock is defined as a partial ownership in a company and these are the shares that usually are referred to when discussing a company’s stock. Investors will always look at common and preferred stocks in many different ways. If I had to choose between preferred and common stock I would have to go with preferred stock. A Preferred Stock is very much like a bond, but usually without an expiration date. Typically Investors would buy preferred stocks for their income potential, and common stocks for their growth. Common stock, on the other hand, generally has far more opportunity for appreciation than preferred stocks to. So it can be a difficult choice and of course will vary but it seems that preferred stock would always be the more beneficial since they do not fluctuate much like common stock would. In addition preferred stocks can have several versions, but with common stock there is only one version. So in my opinion the choice will vary depending on what angle the company would go