It’s great to get preferential treatment, isn’t it? Well, that’s what you get when you hold preference shares! This means that you will get your dividends first before common stockholders. If the company goes bankrupt, preferred shareholders are entitled to shares over common shareholders..
For example…
Jack has decided to buy shares in his friend Dean’s global tutoring business that he helped setup. Because he’s special to Dean, Jack has preferred shares in the company. When it comes to pay the company’s dividends, Jack gets his fixed dividend amount first, along with other preferred shareholders before those holding common shares.
