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A preferred stock is a class of ownership in a corporation.
- Preferred dividends are paid before common stock dividends.
- If the company enters into bankruptcy, preferred stock shareholders are paid from company assets first.
- Most preferred stocks have fixed dividends; common stocks dividends are usually not fixed.
- Preferred stock owners do not have voting rights; common shareholders have voting rights.
- Preferred shares are typically less volatile than common shares and offer investors a steadier flow of dividends.
- Preferred stocks are less risky than common stock.
- Preferred stock owners often have the right to convert that preferred stock into common stock at a prearranged price.