Legal Definitions - guarantee stock

Guarantee stock is a type of preferred stock that guarantees a dividend payment by someone other than the issuer, usually a parent corporation. It is a fixed, non-withdrawal investment in a building-and-loan association that guarantees a fixed dividend or interest rate to all other investors in the association.

For example, if a parent corporation guarantees a dividend payment on a preferred stock issued by its subsidiary, it becomes a guarantee stock. Another example is a building-and-loan association that issues guarantee stock to investors who are guaranteed a fixed dividend rate.

Guarantee stock is a type of preferred stock that provides a guaranteed dividend payment, making it an attractive investment option for risk-averse investors.