Preferred and Common stock

The main reason for having preferred stock and common stock is to differentiate the ownership from management. Now suppose a particular shareholder has 5% stake in a company. This shareholder has a minority yet sizable stake and may use his 5% ownership to force the company to include him in the corporate making. Many companies would not want this. So this shareholder will be given 5% preferred shares but will have limited voting rights in companys' decisions.
**preferred stocks are not traded on the bourse like common stocks.
There are convertible preferred stocks that can be converted to common stocks.
Preferred stocks can also be returned to the company at a fixed price

*preferred stock is generally given to private equity owners who have stake in the company

1. Dividend Payout
Preferred stock holders have a confirmed dividend payout every quarter. Common stock holders may or may not get dividends depending on the company performance.

2. Decision making Rights
Common stock holders have higher priority on corporate decision making than the preferred share holders. For common stock holders generally 1 stock equals 1 vote

3. Liquidation / Bankruptcy
In case a company goes for liquidation or files for bankruptcy, the preferred share holders get preference for getting all company assets before the common stock holders