Preferred Stock

Preferred stock pays dividends ahead of common stock but carries no voting rights. It typically offers a higher or prior dividend and ranks above common shares if the company is wound up.

For the company it is a way to raise money without sharing control, since no votes come with it. Founders who want to protect their stake often issue preferred shares for exactly that reason.

For an individual investor who was never going to vote at a shareholder meeting, it can be the more sensible choice. Preferred shares often trade below the common stock of the same company, which lifts the dividend yield.

Thin trading is the drawback. Fewer people buy and sell them, so spreads are wider and it can be hard to move a large position at once.

They are also easy to confuse. Common and preferred shares of the same company usually share a name and differ by a single trailing symbol. Check which one you are buying before you order.