Preferred Stock

Preferred stock for investing or raising capital

By Geraldine McGowan

Preferred stock plays different roles for investors and business owners. When issued by companies it is to raise capital. For investors, it offers more security than common stock. For instance, preferred stock shareholders receive their dividends ahead of common stock shareholders, and the dividend is fixed rather than fluctuating. In the event of bankruptcy, preferred stockholders are paid off before common stockholders. Preferred stock does not have voting rights. It is perceived as a "poison pill," which can prevent a hostile take over.

Preferred stock is considered fixed income. There are different varieties of preferred stock which are relative to the different needs of investor and business owner. Investors opt for preferred stock as a low risk investment. Business owners opt for preferred stock as a means of growing their business. Always check the advice of a preferred stock expert or get preferred stock consulting.

1. Issuing preferred stock is an investment strategy whereby companies maintain an ability to avoid a hostile takeover.

2. Preferred stock gives fixed dividends, meaning the dividends do not change as the result of the ups and downs of the stock market.

3. Preferred stock is bought to offset riskier investments in an investment portfolio.

Do your research on preferred stock

You should research on your own, (or at least have your financial officer do so), if only to acquaint yourself with the basic terms that are used with stocks. From there, check out what commentators have to say about preferred stock. Some even give you their picks for investing.
Try: American Investment Training has a financial glossary that provides definitions of stock terminology. Motley Fool is a financial newsletter; here you will find preferred stock advice that's sharp, clear and to the point. Money-Zine gives good preferred stock information for buying it.

Find a consultant for preferred stock

Using a consultant for preferred stock allows you to use the expertise of someone whose business is identifying solid preferred stocks choices. A preferred stock expert gives the history of preferred stock performance and calculates its future performance.
Try: Ziegler Wealth Management provides financial planning for small businesses. It provides the experience and knowledge of a preferred stock expert. Fidelity Investments is a huge presence in the investment market. Its use of preferred stock is strategic. You will get expert advice on preferred stock tips. It does financial planning for small- to medium-sized businesses, where preferred stock is used in your company's portfolio.

Try online investing in preferred stock

With the advent of the Internet there are avenues upon avenues for investing in and learning about preferred stock.
Try: Preferreds OnLine manages investments in preferred stocks with consistent yields. However, it is pricey and it is up to individual investors to decide if its fees are worth paying. Charles Schwab is a full-service online investment organization with 24/7 support. Through its portal, preferred stock investing is at your finger tips. It too can provide companies with preferred stock consulting advice.

Investigate issuing preferred stock

Business owners can issue preferred stock to outside investors in order to raise capital and at the same time protect themselves from selling interest in the company to outside interests. Preferred stock is issued in different grades.
Try: Should you issue preferred stock in your company? The Financial Web addresses that question and the pros and cons for doing such. The Washington State Department of Financial Institutions provides good information on growing your company including through issuing stock.

If you are not an expert in economics or business management, invest in a consultant for preferred stock issuance.