What is a Cumulative Dividend?
A cumulative dividend is a type of dividend that may carry a deferred payment for a period of time. During the period when dividend payments are not issued, the totals of the payments accumulate under the account information for the investor. When payments are resumed, the accumulated dividends are paid in the chronological order, with the oldest of the deferred payments issued before more recent payments. The structure of a cumulative dividend arrangement is to the benefit of shareholders that hold an interest other than common stock. In the event that dividend payments are deferred for a period of time, preferred shareholders can anticipate receiving payments before any investor that holds common stock issued by the same corporation. In most cases, all investors holding preferred stock must receive all pending cumulative dividend payments before other investors receive any payments. Depending on the country of residence, this is sometimes due to governmental regulations. In other ins
