Like bonds, preferred shares compensate owners with scheduled payments which resemble interest. However, preferred "interest" is actually in the form of a dividend. This is a significant accounting difference as preferred dividends, unlike debt interest, are charged after taxes and below net income, therefore reducing net income and ultimately earnings per share. Preferred shares may also contain conversion privileges which allow for their exchange into common stock.
The dividend yield is the total yearly payments divided by the principal value of the preferred share.
The current yield is those same payments divided by the preferred share's market price.
If the preferred share has a maturity (not always) there can also be a yield to maturity and yield to call calculated, the same way as for bonds.
Read more about this topic: Yield (finance)
Other articles related to "preferred shares, shares, share":
... receive stocks of NOK 5.4 million—half in preferred shares and half in common shares—for the incorporation of the Tinnos Line and NOK 4.2 million was for the state financed part of the Sørland Line ... Private investors would be allowed to sign shares for 5.9 million in preferred shares ... Parliament instead suggested that NSB be given the preferred shares, and all new equity be signed by the state now Norsk Transport would have to guarantee for the profits for the state ...
... A split share corporation is a corporation that exists for a defined period of time to transform the risk and investment return (capital gains, dividends, and possibly also profits from the ... Most commonly a split share corporation issues equal numbers of shares from a class of preferred shares and a class of capital or class A shares ... The proceeds of the share offering are invested in conventional dividend-paying shares according to the regulations of the split share corporation ...
... The preferred shares of a split share corporation are intended to provide an investment vehicle for more conservative investors, one that provides a relatively high income stream and safety in ... Greater safety is provided since the preferred shares are given priority over the capital shares both when income is paid out and when the corporation is wrapped up ... The income from the preferred shares is usually declared as dividend income, which in some jurisdictions (e.g ...
... Under this agreement, the Gilman heirs received $1.25 million in preferred shares paying 6% per year while Hartford received $700,000 in common stock and the remainder of the preferred shares ... Over the years, Hartford was also able to repurchase the preferred shares from the Gilman heirs ...
... The capital shares bear greater risk than the preferred shares in the event that the value of the underlying basket of conventional shares falls in value ... payments to the holders of capital shares may be reduced or even suspended entirely before reductions can be considered in the dividends paid to the holders of the preferred shares ... The value of the capital shares on the secondary markets may fluctuate considerably and may be reduced to zero ...
Famous quotes containing the words shares and/or preferred:
“The ideal of men and women sharing equally in parenting and working is a vision still. What would it be like if women and men were less different from each other, if our worlds were not so foreign? A male friend who shares daily parenting told me that he knows at his very core what his wifes loving for their daughter feels like, and that this knowing creates a stronger bond between them.”
—Anonymous Mother. Ourselves and Our Children, by Boston Womens Health Book Collective, ch. 6 (1978)
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—Henry David Thoreau (18171862)