Definition: A class of stock that usually pays a higher dividend than the common stock. However, preferred stock is less liquid and usually doesn't have voting rights.
TeenAnalyst Advice: People usually buy preferred stocks to take advantage of their dividends. Many preferred stocks pay dividends of 6% or more. These stocks also move in relation to the stock price, but often less noticeably.
The alternative to investing in preferred stock is to invest in common stock. This is what most investors do.