cumulative dividend

A dividend that grows from year to year when not paid.

• A cumulative dividend is usu. on preferred shares, and it must be paid in full before common shareholders may receive any dividend. If the corporation does not pay a dividend in a particular year or period, it is carried over to the next year or period and must be paid before the common shareholders receive any payment.

— Also termed accumulative dividend. Cf. noncumulative dividend. [Cases: Corporations 68, 156. C.J.S. Corporations §§ 158, 177, 180–183.]

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