Accumulated Dividend
A dividend that has been declared but not yet paid. This term is often used for cumulative preferred stock, where dividends accumulate if not paid.
Definition of Accumulated Dividend

When we talk about an accumulated dividend, it’s crucial to understand that this is a specific type of payout which companies owe to their preferred shareholders but have not yet paid out. As an investment portfolio manager, I want to clarify that these are dividends that accumulate as a liability on the company’s balance sheet until the company decides to pay them.
In our world of investing, accumulated dividends usually occur when a company faces cash flow issues and opts to defer these payments. For preferred shareholders, this deferment doesn’t mean a loss, as their right to dividend payments accumulates over time. This becomes especially significant if you hold preferred shares in a company.
Term | Explanation |
---|---|
Deferred Dividend | A dividend payment that a company has postponed. |
Cumulative Preferred Stock | Preferred stock to which the right of an accumulated dividend applies. |
Non-Cumulative Preferred Stock | Preferred stock that does not accrue unpaid dividends. |
It’s important for us to distinguish between cumulative and non-cumulative preferred stocks. If you’re investing in preferred stocks with cumulative features, you’re entitled to accumulated dividends — meaning, even if the company skips dividends during tough times, they still owe you those dividends before any common stock dividends can be paid.
Remember, the accumulation of unpaid dividends grows over each period of non-payment, and understanding this will allow us to manage your investment portfolio considering the potential implications for your income stream. It’s crucial for us to track such details to ensure the companies we invest in honor their commitments to shareholders like you.