Preference Shares - Are they really preferred ?

Preferred shares usually carry no voting rights but may carry superior priority over common shares in the payment of dividends and upon liquidation. Preferred shares may carry a dividend that is paid out prior to any dividends to common share holders. They may have a convertibility feature into common share. Preference shareholders will be paid out in assets before common stockholders and after debt holders in bankruptcy. - This information is extracted from wiki. :)

A normal share entitles a shareholder to a percentage holding of a company and you get voting rights. You should and depending on the percentage of shares you have in the company, you can act as if you own the company. :)

As a preference share holder you do not get normal voting rights. Being a preference share holder, you are entitled to a dividend amount every year. This dividend is not guaranteed and the frequency of payouts will determine on the strength of the company. Preference share holders always get priority over normal share holders when dividends are given out.

Some information about OCBC preference share

Price : S$100 per share
Total number of shares : 10 million
Value : S$1 billion
Dividend yield : fixed at 5.1% p.a.
Purchase Options A: Contact OCBC.
Purchase Options B: Wait for it to be listed on the SGX.

Most important question: Would King of Shares buy OCBC preference share (assuming he has the money, which he admits, he does not have them) ?

Well, he would consider them. For obvious reasons, King of Shares like the dividends part, but he does not like the fact that preference shares are redeemable only by the issuer. And if the issuer does not redeem them, he can only hold on to them or sell them in a open market . Most of the preference stocks are of low volume and not actively traded. Darn....low volume means nobody buy/sell them. And to make matter worse, the price of the preference shares is determined by a blob of mumbo jumbo.

King of Shares hates to be confused so he would like to share with the readers other high dividends shares that are actively traded in the SGX.

Drool now......

Disclaimer: It is not the intent of the author to advice the readers to purchase any form of investments after reading this article. Any opinions, conclusions or other information expressed here does not constitute any personal advice. Information are given on a general basis and are subjected to change without notice. The author will not be held liable for any losses resulting from any errors, inaccuracies or omitted data or from the use of the published information.