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Applies mainly to convertible securities. Type of preferred stock on which unpaid or Omitted dividends do not accrue. Omitted dividends are, as a rule, gone forever.
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Noncumulative Preferred Stock
Preferred stock for which the publicly-traded company does not need to pay all dividends. If a company misses a dividend payment for any reason, it no longer owes the dividend to noncumulative preferred stockholders. That is, all dividends that were "skipped" are treated as if they never existed. Noncumulative preferred stocks are rare because they are unattractive to preferred stock investors.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Of or relating to a relatively unusual kind of preferred stock on which missed dividends do not have to be made up. Compare cumulative.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.