Preferred Stock is a class of ownership inside a corporation with a higher claim around the assets and cash flow than common stock. Preferred stock generally features a dividend that must definitely be paid out before dividends to common stockholders and also the shares tend not to have voting protection under the law. The precise details as to the structure of favored stock is unique to each corporation. However, the best way to think about preferred stock will be as a financial instrument containing characteristics of both equally debt and collateral. Also known as “preferred shares”.