Question

What is the source of return investors in common stock look for the most? What is the source of return investors in preferred stock look for the most?

Answer 1

Investor will always look for high rate of dividend as dividend will be providing them with the higher expected rate of realised return Whereas its capital appreciation is not a realised gain and it is unrealised gain so investor will always look earning from dividend.

investors in the common stock are also gaining through capital appreciation and share repurchase and capital appreciation is mostly related to another realised gains in the longer period of time.

investors in preferred stock will always look for a preferred dividend because they are mandatory to be paid.