Perpetual preferred stock is a type of preferred stock that does not have any sort of expiration date.
Perpetual preferred stock is a type of preferred stock that does not have any sort of expiration date. This means that the security will retain share redemption privileges as long as the investor retains ownership of those shares. As a result, the shareholder will also continue to receive dividend payments from the investment as long as he or she continues to own the shares. Conservative investors often have at least a few options of this type, as stocks of this type are often stable and will earn consistent returns without carrying too much risk.
As with all types of preferred stock, perpetual preferred stock offers investors an investment option that combines the benefits of an equity security and a debt instrument. Share issues of this type can usually be converted into common shares, but rarely provide the shareholder with voting privileges. In the event of bankruptcy of the issuer of perpetual preferred shares, shareholders with the security type have priority over holders of common shares, which means that their claims are dealt with first. At the same time, both types of stock options are subordinated to any bonds issued by the bankrupt company.
In fact, there is more than one type of perpetual preferred stock. An option is known as cumulative perpetual preferred stock. This particular type of investment opportunity allows for the accumulation of dividends earned over multiple periods, resulting in the payment of cumulative dividends to investors. The terms and conditions associated with the inventory must specify this type of payment arrangement in order for the issuer to provide cumulative payments. Otherwise, dividend payments are issued for each period, with such payments occurring on or before a date range identified in the terms of the shares.
Perpetual preferred stock is attractive to certain types of investors. Anyone who prefers to focus on investments that carry a low rate of volatility, while providing a consistent and reliable rate of return, will find this option worth considering. Investors who have no interest in participating in the election of corporate directors or voting on other issues facing the issuing entity will also find this type of stock option to be a good option. For investors who prefer to focus on short-term investments that are more volatile and have the potential to generate higher returns, perpetual preferred stock may be considered an unattractive asset to include in the investment portfolio.