Why Investors Demand Preference Shares. Most shareholders are attracted to preferred shares because they offer more consistent dividends than common shares and higher payments than bonds.
Benefits Of Preference Shares
- Dividends Are Paid First To Preference Shareholders.
- Preference Shareholders Have A Prior Claim On Business Assets.
- Add-on Benefits For Investors.
- There Are No Voting Rights For Preference Investors.
- Higher Cost Than Debt For Issuing Company.
Disadvantages of Preference Share
- The amount dividend is higher than the rate of interest on debentures.
- The dividend on these shares is regulated by the revenue of the company.
- Risk lovers will not prefer this kind of share.
- Claims of equity shareholders diluted by the preference capital.