Tina Jessick's Blog

Preferred stock is an equity security that represents ownership in a company. Investors typically use preferred stock differently. Capital appreciation (capital gains, growth, buying low and selling high) isn’t the main reason most investors buy preferred stock. The main benefit is cash dividends.

Dividends being distributed depends on its size and overall goals of the company. With preferred stock, you can usually count on getting dividends, and that steady dividend rate is the main benefit for investors. Preferred stock dividends are typically paid quarterly, but you may also see annual or semi-annual payments.

As with common stock, the Board of Directors (BOD) must approve each dividend when it’s due.