Zero-Dividend Preferred Stock

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DEFINITION of 'Zero-Dividend Preferred Stock'

A preferred share that is not required to pay a dividend to its holder. The owner of a zero-dividend preferred share will earn income from capital appreciation and may receive a one-time payment at the end of the investment term. Also referred to as "capital shares".

BREAKING DOWN 'Zero-Dividend Preferred Stock'

Owners of zero-dividend preference shares will not receive a normal dividend. Often, they still maintain reimbursement priority over common shareholders in the event of bankruptcy. While a company may structure preferred shares however they choose, most preferred shares will not have voting rights.

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RELATED FAQS
  1. What are preferred shares?

    Understand what preferred shares are. Learn about both the benefits and the drawbacks of preferred shares, which effects ... Read Answer >>
  2. What is the difference between preference and ordinary shares?

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  3. Why would a company issue preference shares instead of common shares?

    Learn about some reasons that corporations might issue preference shares and why investors might value them more than common ... Read Answer >>
  4. What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
  5. What are the advantages and disadvantages of preference shares?

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