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.