What is a primary characteristic of fixed dividends on preferred stocks?

Fixed dividends on preferred stocks are characterized by their guaranteed nature, meaning they must be paid to preferred stockholders before any dividends can be distributed to common shareholders. This feature provides a level of security and predictability for investors in preferred stocks, as they typically receive a specific dividend amount that is established when the preferred stock is issued.

This priority in dividend payments is crucial for attracting investors who are looking for stable income, especially in times of market volatility. Preferred dividends do not fluctuate with company earnings; rather, they are predetermined. While they can sometimes be deferred, the obligation to pay them comes before common stock dividends, underscoring their primary characteristic of being a fixed payment that provides a level of assurance to investors.