Preferred stock is issued by corporations and has attributes that are characteristic of both stocks and bonds: it generally has a maturity and makes scheduled payments of dividends but trades on the stock exchange.
Reasons to consider:
- You're looking for regular, quarterly income and are willing to accept a higher level of risk for a potentially higher return than most bonds.
- You prefer the extra assurance that if the issuing company goes bankrupt, preferred stock is senior to common stock (although subordinate to bonds).
- You like the trading flexibility of being able to buy and sell the security on the stock exchange.