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Common Stocks vs Preferred Stocks | Similarities and Differences
In this video, we're going to explain the differences between common stocks and preferred stocks.
While they're both stocks in companies and entitle the investors to a claim on profits and assets, common shareholders have a higher return and risk potential than preferred shareholders. That's because common shareholders are subject to greater stock price movements and because preferred shareholders have a higher claim than the common shareholders.
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Return on capital is not guaranteed in common stock. Return is guaranteed in preferred stock at fixed rate. Growth potential is high in common stock. Growth potential is low in preferred stocks.
Spot on!
Excellent video. Thank you so much. Would definitely prefer common stocks because of upside potential. You can always sell stocks when stock market is rumbling and shares go on a downward slide. And from all what my experience is: in the event of an insolvency bonds have preferred status over preferred stocks when it comes to claims on company's assets. So in case bond holders are paid there will not be much left for preferred stock holders.
Thank you for the video! It helped me to understand the difference between the common stock and the preferred stock! Pressed the like button.
love the video! thanks, I was preatty confused after professor's lesson
Thanks man!
Thank you. This is the information I was looking for. Much appreciated 🙂
Thank you for the super clear and no fluff explanation
Thank you so much for making this video. As a beginner in stock market this video helped me a lot. As assured with other beginners like me. Thank you! 😊
@@Lumovest I"ll wait and support your upcoming videos! Thanks for sharing!
Great explanation!!!
Thanks for the breakdown. I literally read a article about a certain company earlier this morning and i bought $500 worth of their preferred stock. I honestly didnt even know what it was. I just had a random amount of money to play with so i said "fuck it." I usually only buy common stocks but now, ima set my portfolio up to where 10% of it is preferred stocks
Good luck my friend. How’s it going for you?
Hopefully you did not go for an all stock portfolio, add some bond investments in portfolio please really helps in the long run to diversify, I'd suggest a 40-60 split between bonds and stocks
This video is such a gem. Thank you very much.
Not all preferred stocks are publicly traded.
And Preferred stocks dividends can be paid out of operating income not net income.
thank you , very concise and clear . right now at this point in my life I'm more of a common stock holder , at the same time I hope to one day have enough I can live on dividends alone or the the interest and never touch the principle
Thank you for the video!
Great job! This was an excellent explanation. 😊
Thanks a lot. I didn't know the difference until now... and I think it's an important one...
Thank you! This helps me alot
Thank you so much🔥because of this video the confusion was cleared and I will pass my exam today
Very helpful! Thanks!
Thank you for this video!
This was very helpful, thanks
Excellent info. Thank you
Really illustrating!
Thank you so much ❤
Thank you !
AWESOME VIDEO !
thank you for this important video
By watching your video I really like it you really showed a wonderful charts and all
Well explained! Thank you 😊
Thanks for watching!
definitely on preferred cause no matter what the company gains they must go through the preffered shareholder first and that locks in a stable connection of profit going from the company to the shareholder itself so for me its better stable than nothing!
Thank you :). Some employees might want to buy assets for the company, in this case I think they would get preferred stocks. But, is there an arrangement where the value of the stocks depreciate in align with the said asset?
excellent thanks
Helpful video 👏
The callability of most preferred stock issued must also be understood, as this is another type of risk to take into account with this type of security.
Thanks.
Thank You 🧡🧡🧡🧡
I find it interesting that Ford Motor Company does not pay dividends with its common shares and that its preferred shares are higher. Ticker Symbol is F for the common shares.
good lecture
Do preferred stocks also comes in classes? Are some class A stocks similar to preferred stocks if designed?
Preferred stocks are good for retired people who don't want risk. You can also buy ETF's that hold preferred stocks, like SPHD, PGX, etc.
What is the main difference
Nice video
What is the reason for allowing/ not allowing voting ?
With love from INDIA . Your videos are helpful
Thanks so much!
Preferred Stock for me.
I will be a pensioner soon. I dont want to take high risk.
Enough return to counter inflation is sufficient.
As long as I can buy doughnut & coffe, I'm okay.
Great explanation! But how we can buy the preferred stock? Because its sold in the same place with common stock
Check with your brokerage firm. There might be a button to click on that will list the preferred shares for any given company. The commission structure should be the same for both common and preferred shares. In other words, should common shares be commission free so will the be preferred shares. Keep in mind that broker assisted trades will result in commission fees which will vary by firm.
Can preferred stocks be shorted or have synthetic shares?
The video sound is pretty good, beyond my imagination
come oooon
common stock
I love it when people who own only 3 shares raise hell at the stockholders meetings.🤣
Great Tutorial
Regards
Gaven Malope
South Africa / Sandton
Hello and thanks for sharing your knowledge. The picture remains unclear for me in a couple of aspects about preferred stocks.
Firstly, I don't understand why a company may decide to issue the preferred stock. Why it may be profitable for a company (or for its common shareholders which is the same)? Which problem does a company solve by issuing the prefs and why may solving those problems (which ones exactly?) be less easy by not issuing them and applying some different ways (which ones exactly)?
Secondly, it's unclear to me why the dividend privilege and the limitations in voting rights go together. Why is the preferred stock designed exactly this way?
Pref stocks don’t give away equity
How do you find preferred stocks though ? I don't really see them on common broker apps for instance.
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How would I know if the share I am buying in the market is a common stock or a preferred stock?
Unless the name of a stock say otherwise, it's a common stock.
How do you get to invest in preferred stocks?
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I would prefer both stocks in 50 50 and anualy rebalance it.
i think so, but there must be a way(some kind of method) to make the proportion more efficient, it doesn't have always 50;50, I wanna know some commonly used method to balance this based on risk profile
Can we say stock is also capital??and why
Is it possible for an individual to have both common and preferred stock?
Yes!
Thank you😊
From a pragmatic point of view preferred stocks are the ideal choice, however if you're looking at it through an idealistic and capital hungry lens rather than a practical monocle then common stocks would be your optimal choice.
Common stock for sure.
it seems the preferred stock is more like a bond rather than stock
Why can companies only pay 2 - 6% in dividends? I tried to look up some information on this but couldn't find any. I get that they can't obviously pay a ridiculous percentage of their earnings but where does the 2-6% come from?
It‘s an average span. There are companies that pay less, and those that pay more. But if a company pays less than the average, it‘s not very attractive. And of it pays more, there‘s usually a catch. High yields are usually a sign of high risk, meaning the company might be going through a crisis and needs to attract investors as soon as possible.
I’m sorry for being si dumb about this but, what is corporate voting?
Only smart people ask questions. Voting is where holders of the stocks vote on key issues. As holders of a company's stocks, you are one of the owners of the company. And as owner of the company you have a say in the company's key policies. So every year, the company puts these key policies up for vote by the shareholders (you).
Ow I get it now, thank you for answering, btw your vid really helps me.
I’m gonna take up a course in college with a connection to finance, and I’m curious about how critical and dynamic working in the said field🤔
is stock and equity same?
Yes!
60/40
common stocks for sure
common stock! because i am a risk taker
Common
Also preferred stock has no equity
He didn’t mention cumulative or non cumulative
As in cumulative or non-cumulative *voting*?
Can you be my mentor though
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(elvishercules48@gmail.com)
Came from the intelligent investor (Benjamin Graham)
PREFERRED STOCK
The video sound is pretty good, beyond my imagination