Which type of stock gives owners preference in dividend payments and claims on assets?

Preferred stock represents a type of ownership in a corporation that provides certain advantages over common stock. One of the key features of preferred stock is that it gives its holders preferential treatment when it comes to dividend payments. This means that dividends are paid to preferred shareholders before any payments are made to common shareholders, ensuring that preferred stockholders receive their returns on investment first.

Additionally, in the event of a company's liquidation, preferred stockholders have a higher claim on the company's assets than common stockholders, which means they stand a better chance of recouping their investments if the company is dissolved. This preference in both dividends and asset claims makes preferred stock an attractive option for investors looking for more stable returns and reduced risk compared to common stock.

The other types of stock mentioned do not possess these same characteristics. Common stock does not provide priority in dividend payments or asset claims. Convertible stock typically refers to a security that can be converted into common stock or another type of equity, and while it may have its own unique features, it does not inherently provide the preferential treatment seen in preferred stock. Equity stock is a broad term that encompasses various forms of stock ownership, including both common and preferred stock, but does not specify the preferential benefits characteristic of preferred stock.