Pros and Cons for Investing in Preference Shares

Pros:
Preference shares have the priority over common stocks in the way that their investors will receive the dividends before the common stock investors. It is good for investors who are just targeting on dividend yields since the company will pay them the dividends in full first.

In case of the company bankruptcy, investors of the preference shares will be paid out in assets before common stockholders.

Price movement of the preference shares will be slow due to low volume trading. Hence investors will not need to spend too much time focusing on the price movement.

Cons:
Keep in mind as well that preference shares may be illiquid as compared to common shares. You may not be able to buy and sell as quickly as equities because of the low volume trading for preference shares.

Preference shares are not suitable for investors who are targeting in capital gain. It is because preference shares tend to give you lower capital gains compared to normal shares.

The issuer has the right, but no obligation, to redeem the preference shares. In the event of redemption, the issuer is likely to pay the investor the issue price for each preference share, plus any dividends payable up to the redemption date. Please note that investors might suffer some loses if they bought their shares at a price higher than the issue price in case of redemption.