when a company issues stock they issue two types preferred stock and common stock preferred stock has priority over common stock when it comes to dividends and asset distribution and is therefore seen as less risky preferred stock usually does not have voting rights whereas common stock does 1
owners of zero dividend preference shares will not receive a normal dividend but they will still maintain reimbursement priority over common shareholders in the event of a bankruptcy 1 in such an event they will get a fixed sum that was agreed upon in advance zero dividend preferred stock is comparable in some ways to zero coupon bonds though they are regarded as lower tier than bonds still they do have upper tier preference compared with common shareholders if a bankruptcy occurs this type of stock is usually backed by the issuer s assets and can be part of split capital investment trusts as a sort of share to produce fixed capital growth in a defined period 