Series 79: Dividends

Dividends

Preferred shares almost always come with the right to the payment of dividends at specified times, typically quarterly. Unlike with bonds, dividend payment is not guaranteed, but preferred shareholders are entitled to receive dividends before any dividends are paid to common shareholders.

If an issuer fails to pay dividends when due, the rights of preferred shareholders depend on whether the stock is cumulative preferred stock (which it usually is). In that case, unpaid dividends continue to accrue until they are paid in full. If the stock is noncumulative, the missed dividend is lost forever, but the presumably angry stockholders may have the right to impose restrictions on the corporation or may automatically be granted voting rights. Credit ra