Preferred stock, also called preferred shares, preference shares, or preferreds, is a special type of equity security that has chracteristics of both an equity and a debt instrument.
Preferreds are senior (i.e. higher ranking) to common stock, but are lower ranking than bonds.
Bonds > preferred stock > common stock
Preferred stocks usually carry no voting rights, but may carry priority over common stock in the payment of dividends and upon liquidation. Preferred stock may carry a dividend that is paid out prior to any dividends being paid to common stock holders. Preferred stock may have a feature to have them converted into common stock. Terms of the preferred stock are stated in a "Certificate of Designation".
Similar to bonds, preferred stocks are rated by the major credit rating companies. The rating for preferreds is generally lower since preferred dividends do not carry the same guarantees as interest payments from bonds and they are junior to all creditors.
Resumating:
The following features are usually associated with preferred stock
Preference to dividends.
Preference to assets in the event of liquidation.
Convertible into common stock.
Callable at the option of the corporation.
Nonvoting.
Preferred stock may or may not have a fixed liquidation value, or par value, associated with it. This represents the amount of capital that was contributed to the corporation when the shares were first issued
Preferred stock has a claim on liquidation proceeds of a stock corporation, equivalent to its par or liquidation value unless otherwise negotiated. This claim is senior to that of common stock, which has only a residual claim
Almost all preferred shares have a negotiated fixed dividend amount. The dividend is usually specified as a percentage of the par value or as a fixed amount.
Some preferred shares have special voting rights to approve certain extraordinary events (such as the issuance of new shares or the approval of the acquisition of the company) or to elect directors, but most preferred shares provide no voting rights associated with them. Some preferred shares only gain voting rights when the preferred dividends are in arrears for a
substantial time.
Types of preferred stocks:
- Prior Preferred Stock – Many companies have different issues of preferred stock outstanding at the same time and one of them is usually designated to be the one with the highest priority. If the company has only enough money to meet the dividend schedule on one of the preferred issues, it makes the dividend payments on the prior preferred. Therefore, prior preferred have less credit risk than the other preferred stocks but it usually offers a lower yield than the others.
- Preference Preferred Stock – Ranked behind the company's prior preferred stock (on a seniority basis), are the company's preference preferred issues. These issues receive preference over all other classes of the company's preferred except for the prior preferred. If the company issues more than one issue of preference preferred, then the various issues are ranked by their relative seniority. One issue is designated first preference, the next senior issue is the second and so on.
- Convertible Preferred Stock – These are preferred issues that the holders can exchange for a predetermined number of the company's common stock. This exchange can occur at any time the investor chooses regardless of the current market price of the common stock. It is a one way deal so one cannot convert the common stock back to preferred stock.
- Cumulative preferred stock – If the dividend is not paid, it will accumulate for future payment.
- Exchangeable preferred stock – This type of preferred stock carries the option to be exchanged for some other security upon certain conditions.
- Participating preferred stock – These preferred issues offer the holders the opportunity to receive extra dividends if the company achieves some predetermined financial goals. The investors who purchased these stocks receive their regular dividend regardless of how well or how poorly the company performs, assuming the company does well enough to make the annual dividend payments. If the company achieves predetermined sales, earnings or profitability goals, the investors receive an additional dividend.
- Perpetual preferred stock – This type of preferred stock has no fixed date on which invested capital will be returned to the shareholder, although there will always be redemption privileges held by the corporation. Most preferred stock is issued without a set redemption date.
- Putable preferred stock – These issues have a "put" privilege whereby the holder may, upon certain conditions, force the issuer to redeem shares.
- Monthly income preferred stock – A combination of preferred stock and subordinated debt.
- Non-cumulative preferred stock – Dividend for this type of preferred stock will not accumulate if it is unpaid.
Source: Wikipedia
Databases offering preferred stock:
Datastream
Equity Active (29)
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| COMPANY NAME | ISIN CODE | SEDOL CODE |
| MET.MGE.& SECS.CO.INCO. | US59219P6025 | 2844626 |
| SOCA.ELEC.& GAS CO. | US8370048527 | 2414900 |
| PREMIER BANCORP.INCO. | US74046J2087 | 2960544 |
| VESTA INSURANCE GP.INCO. | US925391AC84 | |
| SUMMIT SECURITIES INCO. | US8662612097 | 2981738 |
| MILLS CORP. | US6011482089 | 2020590 |
| FANNIE MAE | ||
| FANNIE MAE | US3135868699 | 2165907 |
| MILLS CORP. | US6011483079 | 2218500 |
| CHS INC | US12542R2094 | 2332756 |
| FANNIE MAE | US3135868517 | 2468189 |
| INTERST.PWR.& LT.CO. | US4610708723 | 2681306 |
| FIRST COASTAL BCSH. | US31969P2074 | 2432902 |
| LORAL SPA.& COMMS.INCO. | BMG564621495 | 2599647 |
| MIRANT CORP. | ||
| CBL & ASSOCS.PROPS.INCO. | US1248304073 | 2169954 |
| CBL & ASSOCS.PROPS.INCO. | US1248305062 | 2346133 |
| CINCINNATI BELL INCO. | US1718713043 | 2585141 |
| CARRAMERICA REALTY CORP. | US1444187041 | 2667362 |
| ROYCE VALUE TST.INCO. | US7809104026 | 2012326 |
| KILROY REALTY CORP. | US49427F4054 | 2027869 |
| FPL GP.CAP.TST.I | US30257V2079 | 2460475 |
| STRATS TRUST AT&T CORP. | US86310P2074 | B00FRG9 |
| KEYSTONE PR.TST.CORP. | US4935964076 | B010FL4 |
| BEDFORD PR.INVRS.INCO. | US0764466084 | B00XRB8 |
| CAP.AUTV. | US1397333071 | B013YC7 |
| SAVANNAH ELEC.& PWR.CO. | US8047878025 | B01C242 |
| TARRAGON CORP. | US8762872021 | B0168J1 |
| SIMON PR.GP.INCO. | US8288068021 | B02TS77 |
| PLM EQU.GW.FD. | US6934131060 | 2535102 |
| PONIARD PHARMS.INCO. | US7324492021 | 2582904 |
| WESTPORT RES.CORP. | US9614182098 | 2276780 |
| BEAR STEARNS COS.INCO. | US0739028761 | 2756583 |
| FIRST BANC. | US3186722019 | 2757865 |
| LASALLE RE HDG.LTD. | BMG5383Q1197 | B01D6F4 |
| SPANISH BCAST.SY.INCO. | US8464258586 | 2064628 |
| MARCHEX INCO. | US56624R3066 | B065Y17 |
| HUNTSMAN CORP. | US4470112065 | B066NM4 |
| SPANISH BCAST.SY.INCO. | US8464258412 | B05L353 |
| DIGITAL REALTY TST.INCO. | US2538683010 | B0FGLP4 |
| CITIGROUP FUNDING INCO. | US17308C8745 | B0LKXS7 |
| LORAL SPA.& COMMS.INCO. | US5438854045 | 2112970 |
| TOP 10 SPLIT TRUST | CA8905201171 | B0T4MG2 |
| SUPERTEL HOSPLTY.INCO. | US8685262037 | B0W1VZ2 |
| MEXICO EQ.& INC.FD.INCO. | US5928342048 | B0THTC6 |
| FREDDIE MAC | ||
| AMB PROPERTY CORP. | ||
| ZIONS BANCORPORATION | US98973A1043 | B1L0NK6 |
| GEN.ELEC.CAP.CORP. | US3696227178 | 2459321 |
| NORAM CAPITAL HDG.INCO. | US4136483041 | |
| HYUNDAI MER.MAR.CO.LTD. | KR7011201001 | B1GRRB1 |
| ISHARES TRUST | US4642886877 | B1FLNF0 |
| ITO EN LIMITED | JP3143000101 | B23PWV0 |
| THORNBURG MORTGAGE INCO. | ||
| FANNIE MAE | US3135867865 | B282QS1 |
| FANNIE MAE | US3135867782 | B287ZD4 |
| FANNIE MAE | US3135867600 | B29HJQ4 |
| SY BANCORP INCO. | US7850592053 | B3KQQF5 |
| HC SECURITIES & INV. | EGS692D1P027 | B3BM771 |
| ALKAN HOLDING | EGS690T1P021 | B3DQCS7 |
| SPDR SERIES TRUST | US78464A2924 | B4MTQL5 |
Datatypes: (worldscope) WC03451 is the only datatype that should give data
Compustat / Wharton
Compustat North America:
This database contains many more entrees into peferred stocks and data related to preferred stock. A shortlist follows below.
DCPSTK , Convertible Debt and Preferred Stock
This item represents the balance sheet amount of outstanding convertible debt and the carrying value of convertible preferred stock that is reported as being convertible into common stock. This item is not available for banks.DVPA, Preferred Dividends in Arrears
This item represents the dollar amount of preferred dividends on cumulative preferred stock which have not been paid and are considered to be in arrears. This item is not available for banks or utility companies.
U.S. and Canadian GAAP Definition
This item represents the net number of preferred shares at year-end multiplied by the par or stated value per share as presented in the company's Balance Sheet.
PDVC -- Cash Dividends on Preferred/Preference Stock
This item represents the total amount of cash declared for preferred/preference stock shareholders.
SDCSection GNU (Globl New Issues, US companies)
Unfold option US en select Preferred Stock.
Next data is available in the search screen.
Set Lo Hi values as desired.
Execute and make a report, a tear sheet.
Result example:
In this case, US Public preferred stock, year 2008 and % yield 1 - 10, resuklts 1 hit.
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