What’s the difference between common and preferred stock?

Lucas

I’ve been researching stocks lately and noticed that companies often issue both common and preferred stock. I’m a bit confused about the key differences between them. For example, do they offer the same voting rights? How do dividends work for each type? I’d also like to understand which one might be better for long-term investing or if there are specific situations where one outperforms the other.

Victoria

Common stock gives you voting rights in shareholder meetings, which preferred stock usually doesn’t, but preferred shareholders get priority when it comes to dividends. I’ve held both in my portfolio and found that preferred is more stable for income, while common has higher growth potential.

Hudson

If a company goes bankrupt, preferred stockholders are paid out before common stockholders, so there’s less risk. But common stock can skyrocket in value if the company does well—just look at how Tesla’s common shares surged compared to its preferred ones.