The term first-preferred stock refers to a security that has seniority over all other forms of equity issued by a corporation. First-preferred stock receives preferential treatment in terms of dividend payments as well as assets in the event of liquidation.
First-preferred stock is a security that provides holders with the first claim to dividends. This means investors will receive their dividend payment before common stockholders and other preferred stock issued by the company. In the event of liquidation, first-preferred stock also has a claim to assets that is superior to other equity holders. However, first-preferred stock remains subordinate to bond holders, meaning the lenders have a superior claim to assets.
In addition to the above features, first-preferred stock will normally include a fixed dividend amount, typically specified as a percentage of the security's par value. Although some preferred shares may have special voting rights, these issues usually do not include this feature.