Listen to a Business English Dialogue About Dividend in arrears accumulated dividend
Mia: Hi Adam, do you know what dividends in arrears are?
Adam: Hey Mia! Yes, dividends in arrears refer to unpaid dividends on cumulative preferred stock that have not been declared in previous periods.
Mia: That’s correct, Adam. When a company fails to pay dividends on preferred stock, they accumulate as dividends in arrears and must be paid before dividends can be distributed to common shareholders.
Adam: Exactly, Mia. Dividends in arrears represent an obligation for the company and must be settled before any dividends are paid to other shareholders.
Mia: That’s right, Adam. Shareholders with cumulative preferred stock have the right to receive both current dividends and any dividends in arrears before common shareholders receive any dividends.
Adam: Absolutely, Mia. It’s an important aspect of understanding how dividends work and the rights of different classes of shareholders within a company.
Mia: Indeed, Adam. Dividends in arrears can have implications for a company’s financial health and its ability to attract investors.
Adam: Right, Mia. Investors often look at a company’s dividend payment history, including any dividends in arrears, as part of their investment analysis.
Mia: That’s true, Adam. It’s important for investors to consider all aspects of a company’s dividend policy when making investment decisions.
Adam: Absolutely, Mia. Dividends in arrears are just one factor to consider when evaluating the overall financial health and stability of a company.