Question

What stocks would you pick in your portfolio ? What prompted you to pick them?

Answer 1

For a person looking mainly for investment purpose, it is better to pick up preferred stock in the portfolio because they are similar to bonds and guarantee a fixed dividend in perpetuity. The dividend on this stock is guaranteed and is fixed in nature unlike the common stock which has variable dividend which is also not guaranteed. Another advantage of preferred stock is that during the time of liquidation, preferred stock are paid off before the common shareholder. Thus, if a person is looking to invest money in a risk free venture, then it is better to have preferred stock in the portfolio.