DEFINITION of 'Accumulated Dividend'

A dividend on a share of cumulative preferred stock that has not yet been paid to the shareholder. Accumulated dividends are the result of dividends that are carried forward from previous periods and shareholders of cumulative preferred stock receive dividends before any other shareholders.

BREAKING DOWN 'Accumulated Dividend'

Preferred stock can either be "non-cumulative", which is traditionally the case or "cumulative" when it comes to dividends. Non-cumulative shares are entitled to dividends only if dividends are declared. Some investors may want a guaranteed return on a preferred stock. A cumulative preferred stock allows the investor to earn dividends regardless of the company's ability to pay them immediately or in the future. In some instances, when some companies are not in a financial position to pay a dividend during a certain year, accumulated dividends are created. These dividends must be paid before any other dividends can be paid.

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