What type of stock provides priority status for dividend payments?

Preferred stock provides priority status for dividend payments. This type of stock typically grants its holders a fixed dividend that must be paid out before any dividends can be distributed to common stockholders. This priority status makes preferred stock an attractive option for investors seeking reliable income since shareholders are less likely to miss out on dividends compared to common stockholders, especially during times when the company may face financial difficulties or lower earnings.

Preferred stockholders also have a higher claim on assets in the event of company liquidation, further solidifying their preferential treatment above common stockholders. While common stock can offer potential for capital appreciation, it usually does not guarantee any dividends, which can make preferred stock a more stable income-producing investment.