It is just a different category of stock issued by a company that gives its owners different treatment when it comes to dividend payment and a few other financial transactions.


Preferred stock holders get treated with some preference with regard to the company's profits and assets. For example, dividends are typically guaranteed to dividends whereas the leadership in the company can elect at any time not to pay dividends to common stockholders.

In the event the company is liquidated, the preferred stockholders also get to be first in line when the company is liquidated and the assets are distributed.