The Smart Investor

[Small Time Tina]

Preferred Shares.

Typically give holders the right to a fixed dividend before any dividends can be paid to common shareholders. Shareholders may have no voting rights, but special features on redemption or conversion of preferred shares into common shares exist in many cases.

Dividends are generally fixed, but company may reduce or suspend dividends. Capital gains potential is usually less than that of common shares. Conversion and redemption privileges and other special features may enhance potential for price increases.

Moderate to High. Comments regarding common shares apply. Reduction or expected reduction in dividends may significantly impact share price. Tax authorities, employees, and creditors have claim on assets before preferred shareholders in cases of insolvency.