Do preference shares expire? Why do pref shares for the same company have different ylds?

Answer 1

A company can create shares with different rights attached to them. If you want the definitive answer to how many classes of shares a company has issued, you need to look at the memorandum and articles of association - which you can also download from the companies house website at www.companieshouse.gov.uk.

basically, preference shares give you a higher, fixed percentage dividend than ordinary shares - which only get a dividend if the directors declare a dividend on them. Preference shares always come first in terms of preference - so if there is not enough money (distributable reserves) to pay all shareholders, the preference shareholders will get paid first - and the others will receive nothing. Dividends have to be declared by the board of directors in order to be payable to shareholders. If you have, for example, 8% preference shares, you will get a fixed return of 8% - which could be much better than ordinary shareholders.

Answer 2

Pref stocks like mezanine stocks are all issued for one simple reason that the company badly performs and comes up with some idea to perform in future. The reason it happens is the idea may be spanning some time in future and the upside in performance might be happening in discrete chunks of time.