Noncumulative

外汇网2021-06-19 14:05:48 156

A type of pferred stock that does not pay the holder any unpaid or omitted pidends. If the corporation chooses to not pay pidends in a given year, the investor does not have the right to claim any of those forgone pidends in the future.

Taobiz explains Noncumulative

In the case that pferred shares are cumulative, holders are entitled to any missed or omitted pidends. For example, let's assume that ABC Company chooses to not pay its $1.10 annual pidend to its cumulative pferred stockholders. In this case, these shareholders do not receive the pidend this year, but they are entitled to collect this pidend at some point in the future. If the pferred shares mentioned above were noncumulative, the shareholders would never receive the missed pidend of $1.10. The example above illustrates why a cumulative pferred share is worth more than a noncumulative pferred share.

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