Definition of "Preferred Stock"

A form of corporate ownership that pays a predetermined dividend at regular intervals. Most preferred stocks, however, are issued as non-voting stock. The preferred stockholders have preference over common stockholders in terms of dividends and in the event of bankruptcy and distribution of any remaining assets after creditors have been paid. A corporation may issue different classes of preferred stock. The classes may very in terms of the dividend, profit participation privileges and the degree of preference (some preferred stock issues may have preference over others).