Senior to common stocks – Preferred securities are senior to common stock in payment of interest or dividends, so they are paid out before payments are made to common stockholders.

Exchange-listed – Most preferred securities are quoted and traded on a stock exchange, so their prices are visible and can be tracked and traded during market hours. The liquidity of each preferred security can vary, however, usually based on the amount outstanding of each issue.

Trading flexibility – Stop orders can be used on exchange-traded preferred securities to manage risk.

Credit rating – Because preferred securities are lower in the capital structure than bonds, the credit rating for preferred securities is generally lower than that for the bonds the company issues.

No dividend guarantees – For many preferred securities, a missed coupon payment doesn't necessarily constitute a default. Unpaid coupon payments accrue to holders of cumulative preferred securities, but they are lost with non-cumulative preferred securities.

Call risk – Call risk is the risk that the security gets redeemed by the issuer prior to maturity. Securities are usually called when interest rates fall, meaning investors will likely be reinvesting in a lower interest rate.