Preferred Equity

Definition: Preferred Equity (Preferred Stock) is a class of stock that has a higher claim on a company's assets and earnings than common stock but typically d…

Preferred Equity (Preferred Stock) is a class of stock that has a higher claim on a company's assets and earnings than common stock but typically does not carry voting rights. Preferred shareholders receive dividends — usually at a fixed rate — before common shareholders, and in liquidation they are paid before common shareholders but after creditors. On the balance sheet, Preferred Equity is reported in the equity section, generally above common stock. Preferred Equity is subtracted from Total Equity when computing Book Value Per Share attributable to common shareholders.