What is a Preferred Stock List?

What is a Preferred Stock List?

A Preferred stock list refers to the type of stock that is known to pay a set rate of dividend to its holders before the regular stock holders have got their share. This preference over other stock holders is what gives these securities their name. One major limitation with them is that, they carry no voting rights and as such, the holders have no say over how the company is run.

The preferred stocks are categorized into many types, which are defined by their own unique characteristics. They also have their own share of advantages and disadvantages. Cumulative participating stocks pile all unpaid dividends and pays it out before the common stocks have got their share. They also participate in any additional company profit share that may arise or may be realized in the course of operation.

Non-Cumulative Participating Preferred Stocks are not very much different from the cumulative ones, only that they do not accumulate dividends. This means that if shareholders miss out on some dividends, they cannot expect to get them together with the next dividends that will be declared. Any unpaid dividends are simply lost. This category is also not entitled to a share in any profits.

Convertible preferred Stock is that category of shares which, as the name suggests, can be converted into a certain number of common stock shares. The adjustable rate preferred stock is a category that holds varying interest rates. The dividends are payable according to the prevailing interest rates and as such may earn more or less depending on market conditions. It is advisable for an investor to familiarize himself with all these factors so that he can make an informed decision.

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