What Is a Cumulative Preferred Stock?

Cumulative preferred shares: When the company's profits in a certain period are not enough to pay the dividends of preferred shares, when it accumulates profits in the next year or a later year, before the dividends of common shares are issued, together with Dividends for preferred shares of this year are paid together.

Cumulative preferred stock

Only in a certain business year, if the company's profit is not enough to distribute a fixed

The purpose of the company to issue accumulated preference shares is mainly to protect the income of the shareholders of preference shares from being reduced due to fluctuations in the company's profitability. Due to the regulations, undistributed dividends can be accumulated and will be paid together in subsequent years. Therefore, for shareholders, it is only a matter of time before or after dividend income, which will help protect the interests of preferred stock investors.