What type of stock provides special advantages regarding payment of dividends?

Preferred stock provides special advantages regarding payment of dividends because it typically guarantees dividend payments before any dividends can be paid to common stockholders. This means that in scenarios where the company is distributing profits, preferred shareholders are prioritized and are more likely to receive their dividends consistently and at a predetermined rate.

The benefits of preferred stock also often include features such as cumulative dividends, where missed payments accumulate and must be paid before common dividends can be distributed. This structure provides a more stable income for investors holding preferred stock compared to common stock, where dividends can be more variable and are not guaranteed.

In contrast, common stockholders only receive dividends if the company decides to issue them, making preferred stock the more secure investment for income-focused investors.