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Preferred Stock: Preferred For Steady Flow Of Dividend by nishaidhijames boss`
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Preferred Stock: Preferred For Steady Flow Of Dividend |
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Finance & Investment
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The world is undergoing through a difficult situation with widespread presence of an inflationary trend looming large in the economy. Under this situation, the least people can afford is sustain losses by making unwise investment decisions. This shifts the onus on investors to analyse their requirements before they invest in any financial instrument. For instance, if your need is a steady flow of dividend, opting for preferred stock would be a wise move. Coming to suitability of preferred stock, it fits them the most that are looking forward to build a flow of steady income from stocks. The income generated this way will facilitate you in meeting your monthly expenses. In cases of urgent financial requirements, they serve as god-send for you in getting rid of your financial problems and worries. These stocks enjoy the luxury of getting converted to common stocks at predetermined rates. Fixed and float are two categories of these stocks when it comes to payment of dividends. The only bottleneck these stocks suffer from is the existence of a forced conversion. They are best known for bringing consistent returns on investment which is the primary criteria of investors. When issuer companies struggle to gain profitability or are in a cost cutting spree, they usually do not prefer issuing such stocks. The speciality of these stocks is the existence of yield to call option which gives the issuer company a right to call back these stocks by paying premium or otherwise. When an issuer company undergoes through a bankruptcy situation, these stock holders get a preference in sharing proceeds of assets. Another characteristic of yield to call is the time limitation. Under the company laws, they cannot be called back by the issuing company unless expiry of a fixed time duration. This feature has made them very appealing and they are currently selling like hot cakes in the financial market worldwide.
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