Define: Cumulative Stock

Cumulative stock refers to a type of stock that allows shareholders to receive dividends that have been unpaid in previous years before any dividends are paid to common shareholders.

Non-cumulative stock does not allow for unpaid dividends to accumulate and be paid out in the future. If a company does not declare a dividend in a given year, non-cumulative stock shareholders will not receive any payment for that year.

One potential disadvantage of owning cumulative stock is that if a company consistently fails to pay dividends, the unpaid amounts can accumulate and become a financial burden on the company.

Yes, a company can change the terms of its stock, including changing from cumulative to non-cumulative stock, with the approval of its shareholders.

Cumulative stock shareholders typically have the right to receive unpaid dividends before common shareholders and may also have voting rights in the company.

Dividends are typically paid to cumulative stock shareholders in the form of cash or additional shares of stock.

In some cases, cumulative stock may be convertible to another type of stock, such as common stock, through a conversion process outlined in the company’s bylaws.

Before investing in cumulative stock, it is important to consider the financial stability of the company, its dividend payment history, and any potential risks associated with owning cumulative stock.

Yes, cumulative stock can be bought and sold on the stock market like other types of stock.

In the event of a company’s bankruptcy, cumulative stock shareholders may have a claim to any remaining assets of the company after creditors and other stakeholders have been paid. However, the outcome for shareholders in a bankruptcy can vary depending on the specific circumstances of the company.