Preferred shareholders, which is to say holders of preferred stock, have priority over common stockholders when it comes to dividends, which generally yield more than common stock and can be paid monthly or quarterly. These dividends can be fixed or set in terms of a benchmark interest rate like the London InterBank Offered Rate (LIBOR), and are often quoted as a percentage in the issuing description.
Unlike common stockholders, preferred stockholders have limited rights which usually does not include voting. Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate in price. This appeals to investors seeking stability in potential future cash flows.
