Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
What is Types of Preferred Stock?
Cumulative preferred accrues missed dividends, which must be paid before any common dividend. Convertible preferred can be exchanged for common shares. Callable preferred can be redeemed by the issuer. Participating preferred can receive extra dividends beyond the stated rate. Adjustable- or floating-rate preferred resets its dividend to a benchmark, so its price is more stable when rates move.
Types of Preferred Stock: a worked example
A company skips two years of a $2 cumulative preferred dividend; it owes $4 per preferred share (plus the current $2) before common holders get anything.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.
Dividend Discount Model
A stock is worth the present value of its future dividends.