Preference Shares, more commonly referred to as Preferred Stock, are issued primarily by Financial Institutions and PLC’s, intended as a way to raise capital without diluting value for their ordinary shareholders. Most preference shares pay investors a Fixed Dividend, as opposed to common stocks which generally do not; often this finds favour with experienced investors in times of market uncertainty, turbulent financial markets and recession downturns. In similar fashion, some preference shares have a maturity date whilst others do not. The most popular preference shares are officially ISIN Listed and registered. Preferred Stock effectively shares characteristics of both bonds and common stock, enhancing its appeal to certain investors.

Mature investors, more risk averse, may find them appealing particularly as they can benefit from Annual Liquidity Redemptions and are Callable (issuer can redeem them at any time). 

Effectively preferred stock are shares of a company’s stock with dividends that are paid out to shareholders before common stock dividends are issued. If the company enters bankruptcy, preferred stockholders are entitled to be paid from company assets before common stockholders. Although technically defined as equities, preference shares offer a yield similar to that of a high yield bond, but with typically lower credit risk and volatility.