Dividends in Arrears

dividends in arrears

Dividend payments on cumulative preferred stock that have been passed by a firm's directors. These dividends must be brought up to date before any payments are made to common stockholders. Any payments of dividends in arrears go to the current holders of the preferred stock regardless of who held the stock when the dividend was passed. Also called accumulated dividend.

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Dividends in Arrears

Dividends on preferred stock that are past due. Because preferred stock has guaranteed dividends, a company is legally required to pay the dividends before it makes any dividend payments at all on common stock. Dividends in arrears go to the current owners of preferred stock when they are paid; the person who owned it when the dividends originally should have been paid receives nothing. They are also called accumulated dividends.