Nonparticipating

Nonparticipating

Describing a stock that entitles the holder to a flat dividend and nothing else. That is, the dividend will not be higher if the company performs particularly well, but instead remains the same at all times. However, nonparticipating stockholders are usually entitled to a minimum dividend, unlike common stock holders, who do not have a similar right. Most preferred stock is nonparticipating. See also: Participating preferred stock.

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nonparticipating

1. Of, relating to, or being a class of preferred stock that does not have the right to participate with common stock in earnings growth through increases in dividends. Nearly all preferred stock issues are nonparticipating. Compare participating.

2. Of or relating to a type of life insurance policy in which policyholders do not share in the investment successes or failures of the insurer. Compare participating.