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Preferred Stock

POSTED ON JUNE 10, 2022    

What it is

Preferred stocks are similar to common stocks in the sense that everyone who owns either is a part-owner of the company which issued the stocks.


The main difference is that holders of preferred stocks have priority over a company’s dividends and assets (in case the company has to be liquidated). There may also be a difference in terms of the right to vote for the company’s board of directors.


Like common stock, preferred stock is traded in a stock market. In the Philippines, it is the Philippine Stock Exchange or PSE. Both types of stock are listed separately from each other, so their prices will probably be different.


What it means for you

There are potential advantages and disadvantages to owning common and preferred stock of a company. The growth of one doesn’t always match the growth of the other, for example, and the dividend yield may be different between the two as well.


If you’re considering investing in a company through its stocks, you should look at the performance of both its common and preferred stocks to see which one might fit your needs better.


Remember also that while you can buy both types through a stock brokerage, there are also other ways to put your money in stocks.

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