How is preferred stock similar to bonds? (Points : 1) Dividend payments to preferred shareholders (much like bond interest payments to bondholders) are tax deductible. Investors can sue the firm if preferred dividend payments are not paid (much like bondholders can sue for non-payment of interest payments). Preferred stockholders receive a dividend payment (much like interest payments to bondholders) that is usually fixed. Preferred stock is not like bonds in any way.