Preferred stocks are an investmentvehicle that may make sense for doctorswho want a relatively stable place to parktheir money in an uncertain market. Likecommon stocks, preferred stocks representpartial ownership in a company, butthe dividends are paid to preferred stockholders before they are paid to commonstock holders, and preferred stocks takeprecedence over common stock in theevent of a liquidation. These securitiestrade like regular stocks and pay incomelike bonds, but offer higher yields thanbonds of comparable qualities.
Purchased mainly by long-term investors,a big benefit of owning preferredstock is the 15% maximum dividend taxthat applies to many of these stocks vs the35% maximum tax on conventional bonds.offers the advice thatbefore buying, determine if the stock iscumulative, where the company mustmake good on missed dividends, vs noncumulative,which do not. For additionalinformation on how to evaluate preferredstock, visit QuantumOnline.com or PreferredsOnline(www.epreferreds.com).