If you decide to invest your money in a company, you can select either common stock or preferred stock. Preferred stock is a higher class of stock and typically features fixed dividends, although owners usually don't have voting rights. Dividends are payments made to shareholders by a corporation. Buying preferred stock in a corporation is advantageous because dividends or shares paid to preferred stockholders take precedent over dividends paid to common stockholders. You can work with a local brokerage firm to purchase your stocks, or you can trade yourself and use an online brokerage firm.
1. Open an account with an online brokerage firm, such as E*Trade or Scottrade, by completing the online application. Click the link to open a new account, choose the type of account and then supply your personal information.
2. Fund your online account to begin investing in preferred stocks. Send a check to the online brokerage firm after opening your account or authorize the brokerage firm to deduct the funds from your bank account. Minimum deposits average $500.
3. Create a list of companies that interest you. Select companies with a strong performance history to maximize your income. Research these companies by reading stock market reports and monitoring fluctuations in the stock prices. Go online and search for investing and business articles that discuss these companies, or check company websites to view their annual reports.
4. Sign onto your online brokerage account once you've decided on a company to invest with. Search for your chosen company and then follow the instructions to make your selection. Preferred stocks are easily identifiable because they're listed apart from common stock with a different ticker symbol.
- Make sure you understand the type of preferred stock in which you are investing. For example, some companies issue preferred stock that is convertible into bonds. Companies may also issue different classes of preferred stock, where one class has a higher claim to dividends than another.
- Not all brokerages allow you to buy and sell preferred stock, so make sure the one you choose does.
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