Common Stocks vs. Preferred Stocks: What's the Difference?

[Suba]

When we enter the world of stocks, we'll encounter various types of stocks, with the most popular being common stock and preferred stock. Although preferred stock can be exchanged for common stock, the number of preferred shares issued by a single issuer is much smaller than common stock from the same company and is difficult to trade.

For beginners, the terms preferred stock and common stock can be confusing, and we all want to know the difference and which stock is more profitable.

 

[gwolf666]

Common stock offers voting rights and unlimited earnings potential, but carries greater risk and no guaranteed dividends. Preferred stock offers fixed dividends and priority payments, but no voting rights and limited growth, making it more suitable for investors seeking stability and less risk. Common stock offers voting rights and greater earnings potential, but also carries greater risk and variable dividends. Preferred stock, on the other hand, offers fixed dividends and priority payments, but generally does not offer voting rights and has less growth potential, making it more suitable for investors seeking stable income and security.