why do companies issue preferred stock 
selling preferred stock like any other shares lets a company raise money by selling a stake in the business a company may do this to raise capital for business expansion debt repayment or to invest in new projects preferred stocks are less dilutive of company ownership since they do not come with voting rights 6 they offer the issuing firm other benefits not least because being less volatile makes them appeal to different investors the fixed dividends also stabilize the company s balance sheet making it more attractive to additional investors another reason is that for some companies the cost of issuing preferred stock is lower than issuing bonds unlike interest payments on bonds dividends on preferred stock are not mandatory and generally are not tax deductible for the corporation however they might still be less costly than the higher interest rates a company might have to pay to entice bond investors 