Accumulated dividend, Corporate Finance

It is a dividend on a share of cumulative preferred stock that has not still being paid to the shareholder. Accumulated dividends are the product of dividends that are carried forward from earlier periods and shareholders of cumulative preferred stock get dividends before any other shareholders.

Preferred stock can either be "non-cumulative", which is conventionally the case or "cumulative" when it comes to dividends. Non-cumulative shares are allowed to dividends only if dividends are confirmed. Some investors may want a sure return on a preferred stock. A cumulative preferred stock permits the investor to gain dividends despite of the company's capability to pay them immediately or in the future. In several instances, when a few companies are not in a financial position to pay a dividend during a certain year, accumulated dividends are produced. These dividends should be paid before any other dividends can be given. 

Posted Date: 7/27/2012 8:02:01 AM | Location : United States

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