| Preferred Stocks $25 Trust Preferred Issues |
| KNOW YOUR PREFERRED's IN ORDER TO COVER THE TOPIC OF PREFERRED STOCKS WE NEED TO FIRST UNDERSTAND THE MOST COMMON DEFINITIONS USED WHEN DISCUSSING PREFERRED STOCKS. IT IS IMPORTANT TO ALL OF THE DETAILS OF EACH PARTICULAR ISSUE AS THEY HAVE DETAILS THAT CAN RANGE FROM SOUP TO NUTS. Preferred Stock A class of Stock which provides a specific dividend and which takes preference over common stock in the event of liquidation. Does not normally have voting rights (like common stock does). Cumulative Preferred Stock Preferred stock in which dividends continue to accrue in the event the company were to discontinue payment for any reason. For instance if the company were to not pay the required dividend in the 1st quarter of their fiscal year, they would be required to pay the missed dividend PLUS the current dividend the next quarter. Most Preferred Stock is cumulative. Non Cumulative Preferred Stock The opposite of cumulative preferred. If a payment is missed does NOT pay it in the future. Convertible Preferred Stock Preferred Stock that can be converted into common shares. The terms and conditions for the conversion are outlined, typically with various dates involved Redeemable Preferred Stock Preferred shares which may be redeemed by the company at any time which they shall designate (most commonly 5 Years after issue). Typically redeemed for a set price (i.e. $25.00) plus accrued dividends Trust Preferred Stocks Preferred stock issued by a trust. The trust is set up to purchase a debt issue from a corporation which then receives interest payments from the corporation and pays it out as dividends to the security holder. The dividend is NOT eligible for the lower 15% dividend tax rate. Trust Preferreds are normally senior to other preferred stocks. Voting versus Non Voting Preferred Virtually all preferred issued today is NON VOTING meaning you have no say in the operating of the corporation. RESEARCHING PREFERRED STOCKS We suggest researching preferred stocks by 1st understanding the Company just as you would for any stock investment. Once you have determined you are comfortable with the company itself there is little more to do except to understand the details of the preferred issue. We list much of the needed information on the preferred stocks listing pages---but do further due diligence to understand any particular quirks the issue may have. |
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