Preferred stock is a type of capital stock that has a higher claim on a company’s assets and earnings than common stock. Preferred stockholders are entitled to receive dividends before common stockholders, and in the event that the company goes bankrupt, preferred stockholders have a higher claim on the company’s assets than common stockholders. However, preferred stock does not typically have voting rights, unlike common stock. Preferred stock can be a hybrid security, as it has characteristics of both debt and equity. It is often considered less risky than common stock, but it also offers a lower potential return. Preferred stock is often issued by mature companies as a way to raise capital without incurring debt.