Preferred Shares?

[hendi_alex]

Preferred shares represent company debt. The company borrows money form the investors and promises to pay usually a fixed rate over the life of the debt. Though most preferred shares have a minimum call date before which the company can not recall the shares, they do not usually have a maturity date. Therefore the company can let them go as long as such is advantageous to do so. Some preferred shares are cumulative, meaning that if the dividend is suspended for some reason, that dividend continues to accrue and must be paid later. As long as dividends are being paid on the common shares, the dividend can not be suspended on the preferred shares. Before dividends can be restarted on the common shares, accrual amounts on the preferred shares must be paid and regular payments resumed. Preferred stocks can sell at anywhere from discount to redemption to premium to redemption value, and that obviously affects the effective yield.

This info is in the context of my personal understanding, therefore could be subject to error.