what is preferred stock 
preferred stock is a distinct class of stock that provides different rights compared with common stock while both types confer ownership in a company preferred stockholders have a higher claim to the company s assets and dividends than common stockholders 5 this elevated status is reflected in the name preferred stock common stock vs preferred stockcommon and preferred stock both let investors own a stake in a business but there are key differences that investors need to understand shareholders in a company have the right to vote on important decisions regarding the company s management for example shareholders vote on the members of the board of directors usually common stock allows the shareholder to vote but preferred stock often does not confer voting rights 6both common and preferred stockholders can receive dividends from a company however preferred stock dividends are specified in advance based on the share s par or face value and the dividend rate of the stock businesses can choose whether or not and how much to pay in dividends to common stockholders 