If a corporation pays a dividend, which group receives priority in receiving the dividend?

Question

Quizplus · Accepted Answer

Holders of preferred stock typically receive priority in receiving dividends over holders of common stock. This is because preferred stock is designed to provide a fixed income stream in the form of dividends, whereas common stock dividends are typically variable and subject to the company's financial performance. Bond holders may receive interest payments, but they do not receive dividends since they are not shareholders of the company. Dividends may be divided among both common and preferred stockholders, but preferred stockholders have priority in receiving their dividend payments before common stockholders.

If a Corporation Pays a Dividend, Which Group Receives Priority