Preferred Stock

Though called “stock” they are in fact similar to bonds.

They are more secure than common stock as they are higher in the absolute priority ladder (meaning in case of bankruptcy, they are paid off before common shareholders can get anything), and they pay dividends regularly, similar to interest paid on bonds.  They have limited room for capital appreciation.

Some preferred stocks contain conversion privileges which make them similar to a bond and a stock. They are known as convertible preferred stock.

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