Editing Openai/68df4a3a-428c-8013-a459-5cff8e17edde (section)

=== Assistant: Got it — let’s break this down simply. ===
Got it — let’s break this down simply.

==== - If a company can’t pay dividends this year, the unpaid amount accumulates (builds up like a debt). ====
* The company must pay all those “missed” dividends later before paying dividends to common shareholders.
* Who gets this? Usually preferred stockholders.

👉 Example:
* You own preferred stock with a $5 dividend per year.
* The company skips payments for 2 years.
* In year 3, before paying common shareholders, the company must pay you $15 ($5 × 3 years).

==== - If the company skips a dividend, that payment is gone forever. ====
* The company is not required to make it up in the future.
* Who gets this? Some preferred stockholders (depends on the stock terms).

👉 Example:
* You own preferred stock with a $5 dividend per year.
* The company skips dividends in year 1 and 2.
* In year 3, you only get $5 for that year — the missed dividends are not paid back.

==== - Cumulative dividends = “IOU system.” Missed payments pile up and must be paid later. ====
* Non-cumulative dividends = “use it or lose it.” If the company skips, you don’t get it back.

Would you like me to also make a comparison table so you can quickly see the difference side by side?