A dividend that a company would have ordinarily declared and paid but decided against doing so. For example, if a company ordinarily pays a dividend each March but decides not to do so in March 2010, that dividend is said to be omitted. A company usually omits a dividend when it is experiencing financial difficulties and wishes to keep the cash that would have gone to pay the dividend to maintain its operations. An omitted dividend is also called a passed dividend.
A regular dividend that is omitted by a firm's board of directors. Passed dividends on most issues of preferred stock, but not on common stock, eventually must be made up. Also called omitted dividend, unpaid dividend. See also dividends in arrears.