How are dividends paid when preferred and common stock are involved?

Question

Let's say .02 cents of dividends are to be paid on outstanding shares of common stock (18000 shares) and there are (2000 ) outstanding shares of preferred stock, do we just do .02 cents * 20000 for the amount of shares? I was used to just doing .02*commonstock outstanding but now preferred stock is involved and i'm confused.
Thanks!

Answer 1

Preferred stock pays a certain percentage of par (par = $100) to their preferred shareholders. So, if your preferred shares pay you a 5% dividend - this is only an example - then you'll be getting $5 (0.05 * $100) for every preferred share that you own. In this case, since you have 2000 shares of preferred stock, that means you'll be getting $10,000 ($5 * 2000 preferred shares) in addition to your $360 (0.02 * 18,000 common shares) that you normally get from you common stock.

Answer 2

Each type of share gets paid seperately. They are paid on how the BOD decides. It could be monthly, quarterly or semi annually. On occasions the BOD may pay special dividends. If they feel they have the profits allow for the payment.