What is a key feature of preferred stock compared to common stock?

Preferred stock indeed has a higher claim on assets than common stock, which is a significant feature distinguishing it from common stock. In the event of a company's liquidation, preferred shareholders are entitled to receive their investment back before common shareholders can claim any assets. This priority makes preferred stock a less risky investment compared to common shares, particularly in scenarios where a company may face financial difficulty or bankruptcy.

This structure is attractive to investors seeking more stability and security in their investment portfolio. While common stockholders may benefit from price appreciation and dividends, they are last in line during asset distribution. Preferred stockholders, on the other hand, typically receive fixed dividends and are prioritized during asset liquidation, reinforcing its appeal in uncertain markets.