A firm must pay all current and previously postponed preferred dividends before it can pay any dividends on common shares, thus the preferred shares have the feature called

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Preferred shares with cumulative dividend rights require that all current and previously postponed preferred dividends are paid before any dividend can be paid to common shareholders. Noncumulative dividend rights only entitle preferred shareholders to their current dividend payment, while participating dividend rights would entitle preferred shareholders to share in any additional dividends paid to common shareholders. Convertible and callable dividend rights are not related to the payment priority of dividends.

A Firm Must Pay All Current and Previously Postponed Preferred