When valuing preferred stock, which of the following is considered?

When valuing preferred stock, the primary factors considered are future dividend payments and the par value. Preferred stock typically provides fixed dividends that are paid before any common stock dividends, making the expected cash flows from these dividends critical to its valuation. The dividends are often stated as a percentage of the par value, so both the future dividends and the par value are integral to determining the stock's present value.

Investors focus on the predictability of these dividends since preferred stock is designed to be less risky than common stock. The present value of the expected future dividend payments, along with any potential value at maturity (if applicable), helps in calculating what the preferred stock should be worth today. This is fundamental in finance, as it directly impacts the energy and strategy used in investment decision-making regarding fixed-income securities like preferred stock.