Preferred Stock

Although it takes the name of a kind of stock, a preferred stock is widely regarded to be a form of fixed income holding.

What it is:
Preferred stock, like a common stock, pays you dividends and gives you ownership of the company. However, the dividends are usually fixed (hence a form of fixed income) and in the event of bankruptcy, preferred stockholders' claim to the company's assets have higher priority than those of common stockholders (hence 'preferred').

Who is it for:
Like a common stock, as long as you have the capital, you can invest in preferred stocks however there are exceptions. Recently, DBS Bank issued preferred stocks solely to institutional investors. You can still get around this by checking out which investment companies bought the stocks and buy into their respective Fixed Income Fund (where preferred stocks are normally found).

How can I use this knowledge:
Look at the financial pages and beam with pride when you see news of preferred stocks because now you know.

Related Posts:
Definitely Definitive
To Ride A Bus
Getting Hot Around the Collar