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Accrued Dividends

Accrued Dividends

  • Term

    Main definition

  • Accrued Dividends

    Accrued dividends are to dividend-bearing preferred stock what accrued interest is to a promissory note.  In both cases, the term accrued and unpaid is used to indicate the amount owing pending the payment date.

    However, dividend-bearing stocks vary among them in many ways including whether or when their dividends actually accrue.  Accrual of a cumulative dividend is like interest of most promissory notes because it can be measured or calculated based on the amount of time elapsing after issuance.  Cumulative dividends start to accrue at a set time and continue to accrue while the preferred stock is outstanding.  However, a dividend that is non-cumulative will not accrue unless and until the Board declares the dividend. If a dividend declaration is conditional, the accrual will take place at a date following being declared when all of the pre-conditions shall have been met.

    Also see Cumulative Dividends and Dividends.

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