Definition

1. Noun:
   • A type of preferred stock: "cumulative preferred stock" refers to a specific class of preferred stock.
   • With a dividend guarantee: Its key feature is that if a company fails to pay a dividend in any period, that unpaid amount accumulates.
   • Priority payment: The company must pay all accumulated, unpaid dividends to cumulative preferred stockholders before any dividends can be paid to common stockholders.

Usage

• Noun:
  • The company issued cumulative preferred stock to attract conservative investors.
  • Holders of the cumulative preferred stock are entitled to receive all missed dividends before common shareholders get anything.

Advanced Usage

• "to be in arrears": used to describe the status of unpaid cumulative dividends.
  • The dividends on the cumulative preferred stock are three years in arrears.
• "cumulative feature": refers to the specific characteristic of the stock.
  • The security's main advantage is its cumulative feature, which protects income during lean years.

Variants and Related Words

• Cumulative preferred shares (n): An alternative term with the same meaning.
  • The fund invests primarily in cumulative preferred shares.
• Non-cumulative preferred stock (n): The opposite type, where missed dividends are not accumulated or paid later.
  • The non-cumulative preferred stock does not offer the same dividend security.

Synonyms

• Prior preferred stock: In some contexts, this can be synonymous, especially when referring to its seniority in dividend payments.

Related Phrases

• Accrued dividends: The specific term for the dividends that have accumulated but not yet been paid on cumulative preferred stock.
  • The balance sheet shows a liability for accrued dividends on the cumulative preferred stock.

Noun

1. preferred stock whose dividends if omitted accumulate until paid out