Preferred Stock is a special equity security that is commonly thought of as a hybrid between an equity and debt.
Dividends are usually higher than the common shares and are senior obligations to the regular shares which means a company would have to pay the preferred shareholders before they pay the common shareholders.
In this environment of low yields on most fixed income investments, investors are flocking to preferreds in search of higher yield.
As a stockbroker, I used to love the preferred stock IPO (initial public offering). WHY?
Because I could hide the commission, we used to tell the clients that there was no commission. I guess technically that was true but we got paid a concession, usually 3-4% of the total invested.
And almost always the IPO would fall below the offering price to compensate for the concession. There was a rule too that you couldn't sell your clients shares for a period of time.
My suggestion now is that if you want to buy preferred stock, go ahead and buy whatever you like in the secondary market, ie. something that has already been issued. Stay away from preferred stock IPO's.