Larger Dividends

• Almost all preferred stock issues pay larger dividends than the common stock issued by a given corporation. Rates are usually comparable to bond yields.
  
  

Guaranteed Rates

• The dividends paid on preferred stock are guaranteed. Most preferred stock is cumulative, meaning dividends must be paid retroactively if a company must skip a dividend payment.
  
  

Priority

• Preferred stock dividends must be paid in full before any dividends can be paid on shares of common stock. This includes any accumulated dividends.
  
  

Volatility

• Preferred shares are not as sensitive to market fluctuations. Though less likely to appreciate, they are also less likely to fall in price.
  
  

Risk

• In the event a company should liquidate for any reason, preferred stock shareholders are paid first before any money is paid to holders of common stock.