If an investor owns participating preferred stock, missed or omitted dividends accumulate and must be paid before any cash dividend is paid to common stockholders.

Question

Quizplus · Accepted Answer

Participating preferred stock typically refers to the feature where these shareholders can receive additional dividends beyond their fixed dividend if the company achieves certain financial goals, not to the accumulation of missed or omitted dividends. Accumulation of missed dividends is a characteristic of cumulative preferred stock, not specifically participating preferred stock.

If an Investor Owns Participating Preferred Stock, Missed or Omitted