The paper explores the differences between preferred and common shares, focusing on their definitions, characteristics, pros and cons for investors, reasons companies issue them, and their respective risk and return profiles.
| Feature | Preferred Shares | Common Shares |
| Dividend Priority | Higher | Lower |
| Dividend Type | Typically Fixed | Variable |
| Voting Rights | Generally Limited or None | One Vote Per Share (Typically) |
| Liquidation Preference | Higher than Common Shares | Lowest |
| Capital Appreciation Potential | Lower | Higher |
| Price Volatility | Lower | Higher |
| Risk Level | Moderate | Higher |
| Potential Return | Moderate (Income Focus) | Higher (Growth Focus) |
Preferred shares are ideal for income-focused, risk-averse investors and help companies raise capital without losing control. Common shares suit investors seeking growth and influence in corporate governance. The choice between the two depends on financial goals, risk appetite, and strategic needs.
Read the full document here: Preferred vs. Common Shares.pdf
