Common Stock vs. Preferred Stock
Have you ever seen two listings in your brokerage app—'Samsung Electronics' and 'Samsung Electronics Preferred'—and wondered 'what's the difference?' The reason the same company has different prices and different rights is right here.
Common vs. preferred stock—what's the difference
There are broadly two kinds of stock. What we commonly buy and sell is common stock, and stock with special rights attached is preferred stock.
The two biggest differences are:
First, voting rights. Common stock can vote at the shareholders' meeting on important company decisions such as electing directors. Preferred stock, on the other hand, usually has no voting rights.
Second, dividend and liquidation priority. As its name suggests, preferred stock receives dividends with 'priority,' and when a company shuts down and distributes its assets (liquidation), preferred shareholders are paid before common shareholders.
The order of getting paid: bonds > preferred > common
When a company goes bankrupt and its remaining assets must be divided, the order is set.
First the lenders (banks and creditors) get paid, then preferred shareholders, and last of all common shareholders.
So preferred stock is somewhat safer than common stock, but it stands behind bonds. It's worth remembering that the word 'preferred' does not mean 'first of all.'
The fact that preferred stock comes ahead in dividends and liquidation does not mean there are no losses. If the company is in trouble, even preferred shareholders may not get all of their principal back.
Korea's preferred stock: the 'Samsung Electronics Preferred' case
In Korea, a listing with 'woo' (우) appended to the company name is a preferred stock (e.g., Samsung Electronics Preferred, Hyundai Motor Preferred).
Since preferred stock has no voting rights, its price is usually set lower than the common stock. Because you can buy more shares for the same money, the dividend yield (the ratio of dividends received to share price) often comes out higher for preferred stock.
However, the actual 'dividend amount per share' is sometimes almost the same for the two. For example, Samsung Electronics paid a dividend of KRW 370 per share on both common and preferred stock in Q3 2025. In the end, the preferred stock's dividend yield looks higher not so much because it pays more dividends but because its share price is lower.
Quarterly dividend amounts differ slightly by source (e.g., Q4 2024: common KRW 363, preferred KRW 364). Dividends depend on company earnings and are not a fixed future figure.
Which one should you understand
The answer is 'understand the character of both.'
Common stock fits when you want a voice in company management, or when you want to fully enjoy the upside as the company grows a lot. In exchange, it comes later in dividend and liquidation priority.
Preferred stock fits when you value stable dividends and priority over voting rights. In exchange, the benefit of explosive growth may be more limited than with common stock.
The important thing is that a similar name does not mean it's the same stock. Before buying, be sure to check the single character 'woo' at the end of the listing name and what it means.
Frequently Asked Questions
Q. Is preferred stock always safer than common stock?
It's true that it is 'relatively' higher in priority because it comes ahead in dividends and liquidation. But preferred stock is still stock, so its price can fall, and if the company gets into serious trouble it can lose principal by ranking behind creditors. 'Higher in priority' and 'no risk' are entirely different things.
Q. Samsung Electronics Preferred is cheaper than Samsung Electronics—so isn't it just a better deal?
It's more accurate to see it as 'the rights are different' rather than 'it's cheaper.' Preferred stock has no voting rights, so it tends to be valued lower in the market by that much. The dividend yield may look higher, but liquidity (trading volume) is often lower than for common stock, so it may be disadvantageous when buying and selling—something to consider together.
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