Dividends in arrears plus the current year dividend must be paid to the holders of preferred stock before common shareholders can receive a dividend.

Question

Quizplus · Accepted Answer

This is true. Preferred stockholders have a higher priority when it comes to receiving dividends. They must receive any dividends in arrears (not paid in previous periods) plus the current year's dividend before any dividends can be paid to common shareholders.

Dividends in Arrears Plus the Current Year Dividend Must Be