UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev | Next
Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: Preferred Stocks Date: 1/29/2011 2:22 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
The usual requirement is that if a company suspends dividends on the preferred, it cannot pay any dividends on the common until it brings the dividends on the preferred up to date.

However, preferreds come "cumulative" and "non-cumulative". In a cumulative preferred, if they miss a dividend they are under obligation to catch up before paying any dividends on the preferred. It is my observation, although perhaps not a requirement, that cumulative preferreds have a final maturity date, which may be far in the future (2050?) and the dividends are not qualified for tax purposes.

The non-cumulative preferreds I've seen do not have a final maturity date and the dividends are qualified for tax purposes. I am not certain whether the company is obligated to catch up any missed dividends on the preferred before paying any dividends on the common, and I do not have an example where this happened.

Best wishes, Chris
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement