Convertible preferred shares are a type of preferred shares that pay dividends and can be converted into ordinary shares at a fixed conversion rate after a certain period of time.
Convertible preferred stock is a type of hybrid security that has features of both debt and equity resulting from a dividend payment and a conversion option, respectively.
Once the common shares are trading above the conversion price, it may be wise for preferred shareholders to convert their preferred shares into common shares.
Once preferred shareholders convert their shares, they waive their rights as preferred shareholders (no fixed dividends or higher asset rights) and become ordinary shareholders (the ability to vote and participate in share appreciation).
The dividend rate, expressed as a percentage or yield, is a financial ratio showing how much a company pays dividends annually in relation to its share price.
Dividend recapitalization is when a private equity firm issues new debt to raise money to pay special dividends to investors who helped finance the original purchase of the portfolio company.
Dividend yield, displayed as a percentage, is the amount of money a company pays shareholders for holding shares divided by the current price of its shares.
A Dividend Received Deduction (DRD) applies to certain corporations that receive dividends from related entities and mitigates potential triple taxation effects.
Forward dividend yield is the percentage of a company’s current share price that the company expects to pay out in dividends over a specified period of time, usually 12 months.