An accumulated dividend is a cash dividend owed to a cumulative preferred stock shareholder but that has not been paid yet. For example, if a company typically declares quarterly dividends of 50 cents but is unable to declare any dividends for 2 years due to cash flow issues, the holder of cumulative preferred shares will have $4/share of accumulated dividends (unlike common stock and non-cumulative preferred stock shareholders). Once the board of directors votes to declare dividends again then the accumulated dividends have priority over any other cash dividends. Pending payment of accumulated dividends to its shareholders, the company will book such dividends as a liability on their balance sheet.
Related Terms: Dividend – Dividend Yield – Dividend Declaration Date – Dividend Payment Date – Dividend Record Date – Ex-Dividend Date – Common Stocks