Perpetual preferred stock

Perpetual preferred stock never has to be redeemed, although issuers often hold the right to call it after a set date. Holders receive dividends at a stated rate, which may be cumulative, meaning missed payments accrue and must be paid before common shareholders receive anything, or non-cumulative. Preferred holders generally have limited or no voting rights.

For issuers, perpetual preferreds raise capital without adding debt maturities or diluting common holders directly, though they create an ongoing dividend obligation. For investors they offer income and seniority over common equity, with price sensitivity to interest rates and to the issuer’s credit quality. Some structures add conversion features or variable rates that adjust to keep the security near par.

Banks and utilities have long used preferreds, and digital asset treasury companies have adopted them to fund crypto purchases. Example: a company issues preferred shares with a 10% annual dividend paid monthly, using proceeds to buy bitcoin while leaving common share count unchanged.