PDSnet Glossary

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Definition

A preference share accumulates its dividend in the event of the preferential dividend being passed for one or more years. Preferential dividends are paid out before ordinary dividends, but sometimes, when the company makes a loss or too small a profit to meet the preferential dividend fully, then if the "prefs" are cumulative they will pay out any backlog before ordinary shareholders receive another dividend. This puts these preferential shareholders in a more secure position than normal preferential shareholders and ordinary shareholders.

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