Preferred Stock Dividends
Because preferred stock sits above common stock in a company's capital structure, preferred stock dividends have preference over common stock dividends. However, preferred stock dividends do not have preference over any securities that are senior in the capital structure — such as unsecured debt and other types of borrowings.Understanding a company's full capital structure is important when considering the potential reliability of preferred stock dividends paid by that particular company. Some important questions to ask include:
- How much common stock "cushion" lies underneath the preferred?
- Are dividends currently paid to the common stock, and have those dividends been stable?
- How much debt sits above the preferred?
- Has the preferred been rated by one of the credit rating agencies?
- Are there other classes of preferreds?
Gaining an understanding of a company's full capital structure and credit profile can help lead preferred stock investors to better decision-making about which preferred stock dividends are most likely to be maintained. As a jumping off point for further research, here are a few pages on Preferred Stock Channel that present preferred stock dividends:
- Highest Yield Preferreds
- Highest Yield Monthly Preferreds
- Dow Component Preferreds
- S&P 500 Component Preferreds
- Socially Responsible Preferreds
- Preferreds of S.A.F.E. Div. Stocks (S. Solid return — hefty yield and strong DividendRank characteristics; A. Accelerating amount — consistent dividend increases over time; F. Flawless history — never a missed or lowered dividend; E. Enduring — long track record of dividend payments.)
Other preferred stock dividend resoures:
- New Preferred Offerings
Keep abreast of new offerings of preferred stock - Preferred Stock ETFs
ETFs provide a "basket approach" to buying preferreds - Preferred Stock Premium Newsletter