Noncumulative
Barron's Finance & Investment Dictionary:
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Noncumulative
term describing a preferred stock issue in which unpaid dividends do not accrue. Such issues contrast with Cumulative Preferred issues, where unpaid dividends accumulate and must be paid before dividends on common shares. Most preferred issues are cumulative. On a noncumulative preferred, omitted dividends will, as a rule, never be paid. Some older railroad preferred stocks are of this type.
| Noncontributory Pension Plan, Noncontestability Clause | |
| Noncurrent Asset, Noncurrent Liability |
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Noncumulative
Investopedia Financial Dictionary:
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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.
Investopedia Says:
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.
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Offering both income and relative security, these uncommon shares may work for you. A Primer On Preferred Stocks
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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