What Is the Preferred Stock List?

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What Is the Preferred Stock List?
What Is the Preferred Stock List? (Image: Stock ticker, courtesy Avian Securities)

There seems to be an endless list of terms you need to know to prepare for investing in the stock market. Some of them identify arcane concepts, while others are more straightforward. Take the term "stock," for instance--most people are aware that shares of stock represent part ownership in the issuing company. The term becomes more complex when broken down into common stock and preferred stock; these different types of stock represent different ownership rights. Consult a preferred stock list to identify companies.

Features

Preferred stock is a type of capital stock--that is, a particular type of share that represents ownership in a company. Owners of preferred stock have priority over owners of common shares when the company divvies up its earnings, and if the company fails, owners of preferred stock have stronger rights to the company's assets. Many companies sell common and preferred stock. It's easy to understand preferred stock, but much more challenging to locate a preferred stock list.

Expert Insight

Preferred stocks are traded on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the NASDAQ. There is no standard notation form that identifies preferred stock on all exchanges. One site in particular, however, seems to be highly recommended by people who work with preferred stock; at QuantumOnline.com, you will find a preferred stock list. Note: You must register with the site first.

Benefits

Investors may turn to preferred stocks when they are seeking a somewhat guaranteed, regular return on their investment. Preferred stock pays a fixed rate, much like bonds. The dividends on some, but not all, shares have tax advantages for the investor, so check with your tax accountant. The value of preferred shares do not rise and fall dramatically, which means investors are unlikely to make a fortune overnight.

History

George Herberton Evans writes in the "American Economic Review" that preferred stock as a special ownership interest first appeared in the United States in the 1830s in the railroad industry. Companies sold preferred stock with special rights to encourage investors to buy ownership in roads that might otherwise seem too chancy. Until the 1990s, corporate investors were the most frequent purchasers of preferred stock; since the mid-'90s, however, individual investors have been able to realize tax advantages from preferred stock, making this form of ownership more attractive.

Warning

Trading stocks is risky business, no matter what kind of investment you're making. Prices go up and down all the time, and when the market grows especially rambunctious, you could lose your entire investment overnight. For this reason, you may find it helpful to talk with a professional broker to learn more about the company you're considering investing in.

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