What is a primary characteristic of preferred shareholders?

Preferred shareholders are known for receiving fixed dividend payments, which is a primary characteristic of preferred stock. These dividends are typically set at a specific rate and are paid out before any dividends are distributed to common shareholders. This means that preferred shareholders have more predictable income from their investments compared to common shareholders, whose dividends can fluctuate based on the company’s earnings and decisions made by the board of directors.

The fixed nature of the dividend payments provides some level of security to preferred shareholders, making it a crucial aspect of preferred stock investment. While preferred shareholders may not have the same voting rights as common shareholders, and their claims on assets occur before common shareholders but after any creditors, the guaranteed dividends are a significant feature that distinguishes preferred shares from other equity types.