Cumulative Dividends

Dividend payments to shareholders made with respect to an investor´s Preferred Stock. They accrue at a fixed rate until paid. Generally, holders of Preferred Shares are contractually entitled to receive dividends prior to holders of Common Stock. Dividends can accumulate at a fixed rate (for example 8%) or simply be payable as and when determined by a company´s Board of Directors in such amount as determined by the board. Because venture backed companies typically need to conserve cash, the use of cumulative dividends is customary. Dividends that are not cumulative are generally called "when, as and if declared dividends."