• Higher dividends. In general, you can receive higher regular dividends with preferred shares. Payouts are also usually greater than what you’d receive with a bond because you’re assuming more risk.
• Priority access to assets. If the company goes bankrupt, preferred shareholders are in line ahead of common shareholders, but still behind bondholders.
• Potential premium from callable shares. Because preferred stock is callable, the company can buy it back. If the callable price is above the par value, you may receive more than you paid for the preferred stock.
• Ability to convert preferred stock to common stock. When you buy convertible shares, you can trade in your preferred stock for common stock. If the value of the common stock drastically rises, you could convert your shares and benefit from its appreciation while investing in a less risky asset.

If you choose to invest in preferred shares, consider your overall portfolio goals. Preferred shares come with high dividend payments but limited growth potential, and they might be called back by a company with little or no notice. While preferred shares offer more dividend security than common stocks, dividends still are not guaranteed.