{"id":6200,"date":"2019-05-11T09:00:02","date_gmt":"2019-05-11T03:30:02","guid":{"rendered":"http:\/\/capitalante.com\/?p=6200"},"modified":"2019-05-10T21:31:48","modified_gmt":"2019-05-10T16:01:48","slug":"preferred-share-vs-common-share","status":"publish","type":"post","link":"https:\/\/capitalante.com\/preferred-share-vs-common-share\/","title":{"rendered":"Preferred Share Vs. Common Share"},"content":{"rendered":"

When a company requires money to finance the several requirements such as the expansion of business or set up a new unit, the company makes use of equity financing from the retail investors by selling a percentage of the business or the company to the investors, in exchange for capital. Usually, a company can raise fund by issuing two types of stocks namely Preferred stocks and Common stocks. In this column, we will discuss preferred share and common share, features of preferred share and common share, how to buy preferred stock and the difference between Preferred Share and Common Share i.e. Preferred share vs. Common Share.<\/span><\/p>\n

What is Preferred Share?<\/span><\/strong><\/span><\/h2>\n

Preferred stocks are the securities of any company or organization which give an investor the ownership right, but not any voting right to the investors in exchange of capital invested.<\/span><\/p>\n

Features of Preferred Share<\/span><\/strong><\/h2>\n

Here are the key features of Preferred shares,<\/span><\/p>\n

Preference on the assets of the company \u2013<\/span> When the company liquidates its assets the preferred stockholders get priority over common stockholders to claim the company\u2019s assets.<\/span><\/p>\n

Dividend Payment \u2013<\/span> Preferred stocks pay a higher dividend in comparison to common stocks. When the company experiences robust earnings growth and profit and then the company decides to distribute money to investors through a dividend, the dividend is much higher than the common stocks. In other words, the company pays dividends to preferred shareholders before common shareholders.<\/span><\/p>\n

Convertibility to common stocks \u2013<\/span> On board of directors\u2019 accord, the preferred stocks can be converted to the common stocks. The issuers also have the right to repurchase or buyback or redeem the preferred stocks from the market after a predetermined period.<\/span><\/p>\n

No Voting rights \u2013<\/span> Even though you have the ownership right, you have no voting right. So, you have no rights to choose the board of directs or on any form of the corporate policy of the company.<\/span><\/p>\n

How to buy Preferred Stock<\/span><\/strong><\/h2>\n

\"How<\/a><\/p>\n