| There are basically two different types of stock your corporation can issue, common and preferred. Common stock is what corporations usually issue to shareholders. Preferred stock, on the other hand is more like a bond or promissory note. It carries a fixed dividend percentage rate. Holders of preferred stock get paid dividends first. If there are profits left after paying the preferred dividends, then dividends are paid to the common shareholders. That's why it's called preferred stock; dividends on it are paid first. There is a drawback however. As a trade-off for getting dividends first, preferred shareholders don't get to vote on matters affecting the corporation. Preferred stock is nonvoting. |
