What are Preference Shares?

Preference shares, more commonly referred to as 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. Most preference shares have a fixed dividend, while common stocks generally do not. Preferred stock shareholders also typically do not hold any voting rights, but common shareholders usually do.

Significance to Investors

Preference shares are an optimal alternative for risk-averse equity investors. Preference shares are typically less volatile than common shares and offer investors a steadier flow of dividends. Also, preference shares are usually callable; the issuer of the shares can redeem them at any time, providing investors with more options than common shares.

“KEY TAKEAWAYS

• Preference shares (preferred stock) are company stock with dividends that are paid to shareholders before common stock dividends are paid out.

• There are four types of preferred stock - cumulative (guaranteed), non-cumulative, participating and convertible.

• Preference shares are ideal for risk-averse investors and they are callable (the issuer can redeem them at any time).

Summary at source;

https://www.investopedia.com/terms/p/preference-shares.asp