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.