Preferred dividends are the dividends that are accrued paid on a company’s preferred stock.
Any time a company pays dividends, preferred shareholders have priority over common shareholders, which means dividends must always be paid to preferred shareholders before they are paid to common shareholders.
Formula to calculate preferred dividends.
Par value, in finance and accounting, means stated value or face value.
Example:
Suppose you have invested in preferred stock of a firm. As the prospectus says, you will get a preferred dividend of 5% of the par value of shares. If the par value of each share is $100 and you bought 1000 preferred stocks. Calculate your preferred dividends.
Therefore, your preferred dividends are $ 5,000.
