Can You Buy Preferred Stock? Complete Guide

Can You Buy Preferred Stock? Complete Guide

Quick answer: can you buy preferred stock? Yes — many preferred shares are available to retail investors on exchanges or through brokerage platforms, while other preferred issues trade mainly in institutional or OTC markets. This guide explains what preferred stock is, how it behaves compared with common shares and bonds, where and how you can buy preferred stock, and practical research, tax and risk considerations.

Preferred stock occupies a middle position between equity and debt: it typically pays higher, bond-like dividends but sits behind debt in creditor priority. If you’re asking "can you buy preferred stock?" this article gives clear, practical answers for retail and institutional buyers, shows where preferreds trade, and walks you step-by-step through purchasing, pricing, and evaluating preferred securities. It also highlights how preferred stock has been used in recent corporate financing (for example, to fund Bitcoin purchases) and provides up-to-date context from market reporting.

As of January 18, 2026, according to Barchart, Preferred Bank (NASDAQ: PFBC) reported last-quarter revenue of $74.98 million — a 3.7% year-over-year increase and a 3.5% beat of analysts' revenue expectations. Analysts expected revenue of $74.5 million and adjusted earnings of $2.79 per share for the quarter. As of January 18, 2026, according to Coinspeaker, Strategy Inc. (formerly MicroStrategy) continued to use common and preferred share issuances to fund large Bitcoin purchases; Strategy’s publicly reported holdings were roughly 687,410 BTC and recent purchases included ~13,627 BTC funded in part by selling regular and special preferred shares. These examples show how companies use preferred stock as financing tools — an important practical reason investors ask: can you buy preferred stock?

Overview of Preferred Stock

Preferred stock is a hybrid equity security that combines features of both common equity and fixed-income instruments. Preferred shares usually:

• Pay regular dividends that can be fixed or variable, giving them bond-like cash flow characteristics.
• Hold higher claim priority than common stock for dividends and in liquidation, but are subordinated to a company's debt (both senior and subordinated bonds).
• Often lack standard voting rights, limiting governance influence compared with common shareholders.

Because preferred stock is structurally between bonds and common stock, it is commonly used by corporations to raise capital while preserving voting control and keeping long-term financing flexible. When investors ask "can you buy preferred stock?" they mean whether these instruments are accessible and appropriate for their portfolio — the answer depends on the specific issue, market, and investor type.

Key Characteristics of Preferred Stock

Dividend Features (fixed, floating, cumulative vs. non-cumulative)

Preferred dividends are established in the security’s terms. Common dividend features include:

• Fixed dividend: a set annual rate expressed as a percentage of par (for example, a 6% dividend on $25 par shares pays $1.50 annually).
• Floating-rate preferred: dividend rates tied to a reference rate (e.g., LIBOR or SOFR plus a spread), which can reset periodically.
• Fixed-to-floating: starts with a fixed coupon for a defined period and then converts into a floating-rate dividend.
• Cumulative vs non-cumulative: cumulative preferreds accrue missed dividend payments — the issuer must pay accrued but unpaid dividends before paying common dividends. Non-cumulative preferreds do not accumulate missed dividends; if the board skips a payment, holders generally cannot claim past unpaid amounts.

Because preferred dividends can be discretionary (declared by the board) except where cumulative features apply, investors should inspect the prospectus to confirm dividend payment mechanics.

Priority and Subordination

In a company's capital structure, payment priority typically follows this order:

1. Senior secured debt
2. Senior unsecured debt
3. Subordinated debt
4. Preferred stock
5. Common stock

At liquidation, preferred shareholders have a superior claim to corporate assets relative to common shareholders but remain behind creditors. This seniority over common often makes preferred stock less risky than common equity in insolvency scenarios, but still more exposed than bondholders.

Voting Rights and Ownership

Preferred shareholders usually do not have the standard voting rights that common shareholders have. Some preferred issues grant limited voting rights under certain conditions (for example, if dividends are in arrears for a period). Preferred shares typically offer less upside participation in company growth compared with common stock, because they prioritize income over capital appreciation.

Callability and Perpetual Nature

Many preferred securities are callable: the issuer can redeem the shares at specified dates and prices (for example, redeemable at par plus a call premium). Call features give issuers flexibility to refinance preferred capital if interest rates fall or the issuer’s credit improves. A large number of preferreds are perpetual — they have no fixed maturity and may pay dividends indefinitely until called. For perpetual and callable instruments, investors should consider yield-to-call calculations as the relevant horizon rather than yield-to-maturity.

Types and Variants of Preferred Securities

Retail vs Institutional Preferreds

Preferred securities are issued in forms targeted to different investor groups:

• Retail preferreds: Often issued in low par values (commonly $25 or $100), exchange-traded on major U.S. exchanges, and structured for individual investors. These are relatively accessible via standard brokerage accounts.
• Institutional preferreds: Typically issued in larger denominations (e.g., $1,000 par) and trade over-the-counter (OTC) or through institutional desks. Access can be restricted by broker platforms or minimum investment sizes, making them less accessible to individual retail investors.

When considering "can you buy preferred stock?" keep in mind the target market for the issue: retail-traded preferreds are easiest for individual investors, while institutional preferreds may require broker assistance or account minimums.

Convertible Preferred Stock

Convertible preferred stock gives holders the right to convert preferred shares into a predetermined number of common shares under specified terms. Conversion can provide upside if the underlying common stock appreciates, blending income with potential capital gains. Convertible preferreds will trade and be priced with conversion features in mind.

Regulatory Capital Instruments (e.g., AT1)

Banks often issue capital instruments that resemble preferred stock but are designed to meet regulatory capital requirements. Additional Tier 1 (AT1) securities are common in international banking: they typically pay coupons but include clauses allowing principal write-downs or conversion to equity if the bank’s capital ratios fall below regulatory triggers. These instruments carry higher risk than standard preferreds and are not equivalent to ordinary corporate preferred stock. Investors should treat AT1 securities as specialized instruments with unique regulatory risk.

Where and How You Can Buy Preferred Stock

Through a Brokerage Account (Retail)

Can you buy preferred stock through your brokerage account? Yes — many retail-preferreds trade on public exchanges and can be bought just like common shares. Steps include:

• Open a brokerage account (online or full-service). We recommend considering Bitget for trading and custody solutions.
• Search for the preferred security’s ticker or series symbol (see next section on symbols and par values).
• Place an order (market or limit) and verify execution.

Retail investors should confirm their broker supports trading the specific preferred series they intend to buy.

Over-the-Counter (OTC) and Institutional Markets

Some preferreds — especially large-par institutional issues — trade OTC and have lower visibility on retail platforms. These may require:

• Broker-assisted trades or institutional brokerage relationships.
• Larger minimum sizes or block trade arrangements.

If you’re a retail investor wondering "can you buy preferred stock" and find the desired issue is OTC-only, consult your broker about access and potential alternatives.

Preferred ETFs and Mutual Funds

For easier access to preferred securities, investors can buy preferred-focused ETFs or mutual funds. Benefits include:

• Instant diversification across many preferred issues.
• Professional management and rebalancing.
• Typically better liquidity than individual preferred shares with wide spreads.

ETFs and funds are useful if you want exposure to preferred stock income without researching and trading many individual issues.

Order Types, Symbols, and Par Values

Practical details to avoid order mistakes:

• Ticker suffixes/series: Many preferreds are listed with a parent common ticker plus a suffix or series letter (e.g., XYZ.PR-A or XYZ.PRA). Using the correct symbol is essential.
• Par values: Common par denominations are $25 and $100 for retail preferreds, and $1,000 for institutional issues. Dividend amounts are often quoted as a percentage of par.
• Order types: Use limit orders when liquidity is thin or spreads are wide. Market orders can lead to unfavorable fills on less liquid preferreds.

When asking "can you buy preferred stock?" be precise with symbol, par and series to ensure you acquire the intended security.

Steps to Buying Preferred Stock (Practical Guide)

1. Open or use an existing brokerage account that supports preferred securities — consider Bitget for an integrated trading and custody option.
2. Research the preferred ticker, par value, dividend rate, cumulative status, call schedule and trading venue.
3. Check liquidity metrics: average daily volume, bid-ask spread, and available market depth.
4. Compare alternatives: individual preferred, preferred ETFs, or corporate bonds.
5. Place the trade using a limit order when appropriate and confirm the correct series/ticker.
6. Monitor corporate announcements for call notices, dividend declarations, or credit events.

These steps answer the practical dimension of the question: can you buy preferred stock, and how should you do it?

How Preferred Stock Is Priced and What Drives Returns

Interest Rate Sensitivity

Preferred stocks are sensitive to interest rate movements similar to bonds. When interest rates rise, fixed-rate preferreds generally decline in price because their coupons become less attractive relative to new issues. Conversely, when rates fall, callable issuers may redeem high-coupon preferreds, capping price appreciation. Floating-rate preferreds mitigate some interest-rate risk but carry other issuer risks.

Credit and Issuer-Specific Risk

Issuer creditworthiness significantly impacts preferred pricing. Preferred shares from banks, utilities, REITs, and other sectors reflect sector-specific dynamics:

• Banks: regulatory and capital ratios affect preferred valuations; AT1 instruments carry regulatory conversion/write-down risk.
• Utilities and REITs: stable cash flows can support preferred dividends but sector leverage matters.

Credit rating agencies may rate preferred instruments or the issuer; yield spreads over risk-free reference rates reflect perceived credit risk.

Call Risk and Yield-to-Call vs Yield-to-Maturity

Callable preferreds may be redeemed at the issuer’s option on call dates. For perpetuals or long-dated callable issues, investors should calculate yield-to-call scenarios because the issuer frequently calls when rates decline. Yield-to-call can be materially different from a simple current yield and is a critical metric when evaluating expected returns for callable preferreds.

Benefits of Buying Preferred Stock

Preferred stock can offer advantages for income-focused investors:

• Higher yields: Preferred dividends are often higher than common dividends and can exceed yields of similarly rated corporate bonds.
• Priority: Preferred holders have priority over common shareholders for dividend distributions and liquidation proceeds.
• Lower volatility vs common stock: Due to their income profile and seniority, many preferreds show lower price volatility than their issuer’s common stock.

These benefits explain why many investors ask: can you buy preferred stock for income strategies?

Risks and Drawbacks

Preferred stock is not without risks:

• Subordination: Preferreds sit behind debt; in bankruptcy they may yield little recovery if creditors exhaust assets.
• Dividend discretion: Dividends can be suspended (unless cumulative provisions guarantee accrual) — dividend payments are not guaranteed.
• Interest-rate risk: Fixed-rate preferreds typically decline when market interest rates rise.
• Liquidity risk: Some preferreds have wide bid-ask spreads and low average volumes.
• Call risk: Callable issues can be redeemed early, potentially limiting upside and resetting yield.
• Limited capital appreciation: Preferred shares often have less potential for large price gains compared with common stock.
• Tax considerations: Dividend tax treatment varies by investor type and jurisdiction; U.S. individuals may have qualified dividend treatment in certain cases but should confirm with tax advisors.

Tax and Regulatory Considerations

Tax treatment varies by jurisdiction. In the U.S.:

• Qualified dividends: Some preferred dividends may qualify for the lower tax rate if they meet IRS requirements; qualification depends on issuer type and holding-period rules.
• Corporate investors: Corporations may claim dividend-received deduction on some preferred dividends; consult corporate tax guidance.
• AT1/regulatory instruments: Bank capital securities (e.g., AT1) can include loss-absorption features (write-down or conversion) that raise regulatory and tax complexity.

Because tax treatment affects net yield, investors should consult a tax advisor for personal guidance.

Retail vs Institutional Investor Considerations

Institutional investors often hold large preferred positions for reasons including tax planning, regulatory capital matching, yield enhancement, and portfolio size. Retail investors should consider:

• Minimums and par values: Institutional preferreds may have high par values or block sizes.
• Access and liquidity: Retail-friendly preferreds trade on exchanges; institutional offerings may trade OTC.
• Research resources: Institutions often have access to deeper credit research and direct issuance details; retail investors should use broker research and public prospectuses.

When evaluating "can you buy preferred stock?" retail investors should verify accessibility, fees and research availability.

Researching and Evaluating Preferred Stocks

Key Documents and Terms to Review (prospectus, call schedule, dividend rate, par)

Before buying, review:

• Prospectus/term sheet for dividend mechanics, cumulative status, conversion features, call dates/prices and any special covenants.
• Call schedule to identify early redemption features and associated call premiums.
• Dividend rate and reference index (for floating instruments).
• Par value and trading symbol.

Tools and Screeners

Use broker preferred-stock screeners, issuer filings, and fund holdings pages to identify issues. Credit ratings from recognized agencies and preferred-focused research sites provide useful credit context. Bitget’s educational materials and platform tools can also help investors find and monitor preferred securities.

Metrics to Compare (current yield, yield-to-call, credit rating, spread)

When comparing preferreds, key metrics include:

• Current yield: annual dividend divided by market price.
• Yield-to-call: considers scheduled call dates and prices — often the most realistic horizon for callable issues.
• Credit rating: where available, to assess credit risk.
• Spread: difference between the preferred yield and a reference (such as Treasuries) indicating risk premium.

Combined, these metrics help answer whether a preferred’s yield appropriately compensates for its risks.

Alternatives to Buying Individual Preferreds

If direct purchase of individual preferreds is impractical, consider alternatives:

• Preferred-focused ETFs and mutual funds — offer diversification and liquidity.
• Corporate bonds — if you prefer contractual debt with maturity dates and higher priority.
• High-dividend common stocks — for potential dividend growth and voting rights.
• REITs or utility stocks — income-generating equities with different risk-return profiles.

Each alternative trades off yield, liquidity, diversification, and capital appreciation potential.

Example Scenarios and Use Cases

• Income-focused retiree: may buy a mix of retail preferreds and preferred ETFs to seek higher yield with more predictable income than common stock.
• Total-return investor: may prefer convertible preferreds that offer income and potential equity upside.
• Institutional allocator: may use institutional preferreds or AT1 instruments for regulatory or balance-sheet matching.

These scenarios illustrate practical answers to the recurring question: can you buy preferred stock for different strategies?

Frequently Asked Questions (FAQ)

Q: Can I buy preferred stock in an IRA? A: Yes. Many preferred securities and preferred-focused ETFs are eligible for IRAs; verify with your broker and confirm tax treatment for dividends in retirement accounts.

Q: Do preferreds pay guaranteed dividends? A: No. Preferred dividends are discretionary unless cumulative provisions apply. Even cumulative preferreds only guarantee that unpaid dividends accrue, not that they will definitely be paid in cash prior to any future time.

Q: How do I find the correct ticker for a preferred? A: Use your broker’s search tools and confirm the parent company, series letter/suffix (e.g., .PR-A or -A) and par value. Verify the prospectus or exchange listing details to avoid symbol confusion.

Q: What happens if a preferred is called? A: If called, the issuer redeems the preferred at the call price. Investors receive the call price (often par plus a premium) and subsequent dividend flow ceases. Yield-to-call is the return metric to evaluate in callable issues.

Q: Can retail investors buy AT1 bank instruments? A: Some AT1 instruments trade on exchanges and are accessible to retail investors, but they carry higher regulatory and write-down risk. Review prospectus terms carefully.

Research & Market Context (Selected Market Examples)

As noted earlier, companies sometimes issue preferred stock as part of financing strategies. Reporting highlights as of January 18, 2026:

• As of January 18, 2026, according to Barchart, Preferred Bank reported a strong quarter with revenue of $74.98 million — a 3.7% year-over-year increase and a 3.5% beat of analyst expectations. Analysts forecasted $74.5 million and adjusted EPS of $2.79 for the quarter. Preferred Bank’s shares traded with some weakness in the two prior weeks, and the company had an average analyst price target of $109.25 vs a trading price of $97.05 at the time of reporting.

• As of January 18, 2026, according to Coinspeaker, Strategy Inc. continued using equity and preferred issuances to fund Bitcoin accumulation. Public filings and disclosure indicated Strategy held roughly 687,410 BTC and completed purchases of ~13,627 BTC financed by share sales, including issuance of a special preferred designated STRC. Strategy’s use of preferred issuance illustrates how companies deploy preferred stock as an alternative financing tool.

These examples show that preferred securities are not just passive income instruments; they are active elements of corporate finance and capital structure decisions.

References and Further Reading

Sources and educational pages to consult for deeper research (no external links provided here):

• Brokerage and exchange educational pages (look for preferred stock sections on major broker platforms).
• Investopedia’s preferred stock primer and dividend explanations.
• PIMCO and major fixed-income manager whitepapers on preferreds and hybrid securities.
• Bankrate and Morningstar primers on preferred ETFs.
• Credit rating agency reports for issuer-specific credit analysis.
• Public filings (prospectus, 10-K, 8-K) for issuer-specific terms and call schedules.

As of January 18, 2026, market reporting from Barchart and Coinspeaker summarized several corporate financing examples using preferred shares.

See Also

• Common stock
• Corporate bonds
• ETFs and mutual funds
• Convertible securities
• Bank capital instruments (AT1/TLAC)

Final Notes and Next Steps

If you’re still asking "can you buy preferred stock?" the practical answer is yes — with caveats. Many preferreds are accessible to retail investors via exchange-traded issues or preferred-focused funds, while institutional preferreds may be harder to access. Before purchasing, confirm the ticker, par value, dividend mechanics, call schedule and liquidity. Use limit orders on thinly traded series, and consider preferred ETFs if you want diversification and easier liquidity.

To explore trading and custody options for preferred securities and to access educational resources and tools for preferred research, consider opening an account with Bitget and reviewing Bitget Wallet for custody needs. For tax-sensitive decisions or regulatory instrument assessments (like AT1), consult a tax advisor or financial professional.

Further reading and platform resources will help you move from the question "can you buy preferred stock?" to selecting the specific preferred issues or funds that match your income and risk objectives.