Preference

• Shareholders who own preferred shares receive dividends from the corporation before a shareholder who owns common stock. Furthermore, dividend payments received by preferred shareholders are usually higher than payments received by common shareholders, as explained by E-PersonalFinance.com.
  
  

Profits

• Preferred stocks have less profit potential in comparison to common stocks. Preferred stock payments are fixed over a specific period, but preferred stock payments do not adjust based on the company's performance. This limits the ability of preferred shareholders to earn more if the company performs well.
  
  

Ability to Pay

• A major drawback concerning preferred stock concerns the corporation's ability to pay. If a corporation cannot pay its preferred shareholders, the company can pay later, when it has the ability to pay. In the event of a corporate bankruptcy, preferred shareholders do not receive dividends until the company's creditors are paid.
  
  

Considerations

• Preferred stocks are less volatile in comparison to common stock prices. However, it may be difficult to sell preferred stock, since returns are fixed and the company's preferred stock price is hard to track.