So, retirees sometimes buy preferred stocks because they want the security. Preferred stocks won't experience the dramatic increases or decreases that common stock often have.
You can research both common and preferred stocks on CNBC.com to check them out for yourself.
compaire KEY (common) with KEY preferred by looking at these two links.
http://data.cnbc.com/quotes/KEY
Preferred stock, as a class, is generally non-voting, and at a fixed dividend rate. It is a bond without the debt status. However, there are preferred issues better than others.
http://www.quantumonline.com/search.cfm?...
http://finance.yahoo.com/q?s=BGEPF
http://finance.yahoo.com/q?s=BG&ql=0
BUNGE PREFERRED is not heavily traded.
Cumulative Convertible Perpetual Preference Shares
$4.875 per share dividends per year
cumulative - dividends not payable in cash can be paid in common stock. If not paid in common stock, it goes into arrears. The arrears must be paid off before any common stock dividends are paid.
convertible - has no value now. may be exchanged at the holders option for 1.0846 shares common. That is only $82.37 now, but if the common goes from 76 to 96, the conversion is worth 104. further increases in the common would be also shown in the preferred.
perpetual - forever
The common stock dividend is only 1.8% and does have a history of increasing, but there is a huge difference from 4.8% to 1.8%
Many preferred stocks are not a good investment. But, how would this compare vs a 4% bond with a 10 year maturity. The BGEPF market price ties to market interest rates, as do bonds. It is in risk-return.
My accounting professor told the class that he thinks buying preferred stock is a bad investment, and he only goes with common stock. Why do some people believe that preferred stock is unfavorable?
