cumulative dividend

Definition

A dividend paid on cumulative preference shares, that the company is liable for in the next payment period if not satisfied in the current payment period (i.e. the dividends accumulate). Unlike a dividend on common stock that the company can pay out to shareholders if they want, dividends on cumulative preferred shares are an obligation regardless of the earnings of the company. The unpaid accumulated preferred stock dividends must be paid before any common stock dividends are.

Use cumulative dividend in a sentence

I wanted to know how the cumulative dividend would impact us and I decided to become an expert on it to know.

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You should try to make sure that you will always have enough money to cover any cumulative dividend you may owe.

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After the private equity company bought a stake in our firm, my boss was dismayed to discover they had negotiated for a cumulative dividend that we would owe them no matter what.

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