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Preferred Stocks - By Yield


Preferred shares are shares issued by a corporation as part of its capital structure.

  • Preferred stock have a 'coupon rate' -- the interest rate you will be paid. This interest rate remains constant on most--but not all, preferred issues. A small number of issues have a rate that 'floats', based upon a baseline such as Libor.

  • Dividends are either cumulative---Cumulative means that dividends continue to accrue if they have been suspended, but they are not paid until the company decides to pay them after suspension or non-cumulative.  Non Cumulative means they do not continue to accrue (they are gone forever). In either case if the dividends are suspended the company is likely in deep financial trouble.

  • Dividends are generally paid quarterly, although a few pay them monthly.

  • Preferred shares normally carry no voting rights (unlike common shares).

  • Preferred shares generally have NO maturity date (most are perpetual).

  • Most Preferred Stocks have an optional redemption period in which the shares may be redeemed, at the issuers option, generally this is 5 years afer issue, but may be more or less.

How do You Buy Preferred Stocks?

You buy Preferreds just like you would any stock.  Put in an order in your brokerage account and wait.  The prime difference with preferred stocks is most trade very 'thin' (little volume) so you should always use 'limit' orders or you may pay way more than is necessary for your shares.

To get more information on preferred stocks, screen them, set up your own portfolio and receive email alerts, go to now.



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