Noncumulative

Noncumulative
A type of preferred stock that does not pay the holder any unpaid or omitted dividends. If the corporation chooses to not pay dividends in a given year, the investor does not have the right to claim any of those forgone dividends in the future.

In the case that preferred shares are cumulative, holders are entitled to any missed or omitted dividends. For example, let's assume that ABC Company chooses to not pay its $1.10 annual dividend to its cumulative preferred stockholders. In this case, these shareholders do not receive the dividend this year, but they are entitled to collect this dividend at some point in the future. If the preferred shares mentioned above were noncumulative, the shareholders would never receive the missed dividend of $1.10. The example above illustrates why a cumulative preferred share is worth more than a noncumulative preferred share.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • noncumulative — [spelling only] …   English World dictionary

  • noncumulative — (ˈ) ̷ ̷ at non + adjective Etymology: non (I) + cumulative : not entitled to future payments of dividends or interest passed when normally due noncumulative stock noncumulative income bonds * * * /non kyooh myeuh leuh tiv, lay tiv …   Useful english dictionary

  • noncumulative voting — Also called straight voting , such voting rights limit a shareholder to voting no more than the number of shares he owns for a single candidate. In noncumulative voting, a majority shareholder will elect the entire board of directors Compare… …   Black's law dictionary

  • noncumulative voting — Also called straight voting , such voting rights limit a shareholder to voting no more than the number of shares he owns for a single candidate. In noncumulative voting, a majority shareholder will elect the entire board of directors Compare… …   Black's law dictionary

  • noncumulative — /non kyooh myeuh leuh tiv, lay tiv/, adj. of or pertaining to preferred stock the dividends of which are skipped and not accrued. [1905 10; NON + CUMULATIVE] * * * …   Universalium

  • noncumulative — adjective a) Not cumulative. b) Not having an accumulating right to receive dividends unpaid in previous periods …   Wiktionary

  • noncumulative — Applies mainly to convertible securities ( convertible security). Type of preferred stock on which unpaid or Omitted dividends do not accrue. Omitted dividends are, as a rule, gone forever. Bloomberg Financial Dictionary …   Financial and business terms

  • noncumulative — adj. does not accumulate, does not collect …   English contemporary dictionary

  • noncumulative — non·cumulative …   English syllables

  • noncumulative preferred stock — preferred stock whose holders must forgo dividend payments when the company misses a dividend payment. Related: cumulative preferred stock. Bloomberg Financial Dictionary …   Financial and business terms

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