Learn · Explainer
Preferred stock
The shares that sit between debt and common stock: how they work, why banks issue them, and which large companies have them outstanding.
The short answer
Preferred stock is a class of shares that ranks ahead of common stock: preferred holders are paid their dividend before common shareholders get anything, and they come first if the company is wound up. In return they usually get a fixed dividend, no vote and no share in profit growth. It's counted in shareholders' equity, but it isn't common shareholders' equity. The table below lists 9 companies Ticker Sage covers in depth that reported preferred stock outstanding at their latest year end; 8 of them are banks. Bank of America had the most: $26.0B.
How preferred stock differs from common
| Preferred stock | Common stock | |
|---|---|---|
| Dividend | Usually fixed, paid before any common dividend | Set by the board, can rise, fall or stop |
| Voting | Usually none, except in special cases | Usually one vote per share |
| In a liquidation | Paid after creditors, before common holders, up to a set amount | Gets whatever is left last |
| Share in growth | Generally no, unless convertible | Yes |
Preferred dividends can be cumulative, meaning a skipped payment has to be made up before common shareholders can be paid again, or non-cumulative, as most bank preferred stock is, meaning a skipped payment is simply lost. Many issues can be redeemed by the company after a set date, and some convert into common shares.
Why banks issue it
For a bank, non-cumulative perpetual preferred stock counts toward the regulatory capital it has to hold, without diluting common shareholders the way new common stock would. That's why 8 of the 9 companies in the table are banks. How banks make money explains how bank statements differ from other companies'.
Preferred stock and the per-share figures
Because preferred holders are paid first, their dividends come out before anything is available to common shareholders. EPS uses net income applicable to common stockholders, after preferred dividends, and book value per share should subtract preferred stock from equity. At Bank of America, preferred stock was 8.6% of total equity of $303.2B.
Companies with preferred stock
| Company | Total shareholders' equity | Preferred stock | % of equity |
|---|---|---|---|
| Bank of AmericaBAC | $303.2B | $26.0B | 8.6% |
| CitigroupC | $212.3B | $20.1B | 9.4% |
| JPMorgan ChaseJPM | $362.4B | $20.0B | 5.5% |
| Wells FargoWFC | $181.1B | $16.6B | 9.2% |
| Goldman SachsGS | $125.0B | $15.2B | 12.1% |
| U.S. BancorpUSB | $65.2B | $6.8B | 10.4% |
| Charles SchwabSCHW | $49.4B | $6.8B | 13.7% |
| OracleORCL | $42.5B | $5.0B | 11.7% |
| BNY | $44.3B | $4.8B | 10.9% |
Total shareholders' equity and the carrying value of preferred stock at the latest fiscal year end, from each 10-K, sorted by the amount of preferred stock. Only companies with preferred stock outstanding are listed. A few companies report preferred stock under line items of their own and aren't included.
Common questions
What is preferred stock?
A class of shares that ranks ahead of common stock for dividends and in a liquidation, usually with a fixed dividend and no vote.
Is preferred stock debt or equity?
It's reported in shareholders' equity, but it behaves partly like debt: a fixed payment, a set claim in a liquidation and no share in growth.
What does cumulative mean for preferred stock?
Missed dividends build up and must be paid before common shareholders get a dividend. Non-cumulative preferred dividends that are skipped are simply lost.
Why do banks issue preferred stock?
Some kinds of preferred stock count toward the capital banks are required to keep, and issuing it doesn't dilute common shareholders.
How does preferred stock affect EPS?
Preferred dividends are subtracted from net income before dividing by common shares, so EPS reflects only what's left for common shareholders.
Disclosures
- Editor holdings
- The editor holds no position in any company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 9, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.