Series 7: 1.3.1 Preferred Dividends

1.3.1  Preferred Dividends

As with common stocks, dividend payments for preferred shares often are paid quarterly. Unlike with common stocks, however, dividend payments for preferred shares are determined when the stock is issued. A fixed-rate preferred stock may set its dividend payment at a fixed-dollar value ($5), or the dividend may be based on a percentage of the par value of the stock as stated on the stock certificate (5%). A floating-rate, or adjustable-rate preferred stock, will have an adjustable dividend based on a formula tied to another benchmark, such as 3% above the interest rate on 90-day Treasury bills. The rate is reset quarterly, making the prices of adjust