Define: Cumulative Preferred Stock

Cumulative preferred stock is a type of preferred stock that requires the payment of any missed dividends before common stockholders can receive dividends.

Non-cumulative preferred stock does not require the payment of missed dividends, whereas cumulative preferred stock does.

One advantage of owning cumulative preferred stock is that it provides a fixed dividend payment, which can be attractive to investors seeking steady income.

One disadvantage of owning cumulative preferred stock is that it typically does not have the same potential for capital appreciation as common stock.

Dividends on cumulative preferred stock are typically paid at a fixed rate and are usually paid before dividends on common stock.

Cumulative preferred stockholders generally do not have voting rights in company decisions.

Cumulative preferred stock generally cannot be converted into common stock.

The value of cumulative preferred stock is determined by its fixed dividend rate and the financial stability of the issuing company.

Dividends on cumulative preferred stock are not guaranteed, but the company is required to pay any missed dividends before paying dividends to common stockholders.