Unpaid preferred stock dividends can accumulate over time, known as dividends in arrears.

Preferred stocks generally come with a "guaranteed" dividend amount, but it's important to realize that if the company falls on tough financial times, even preferred dividends can be suspended. Fortunately, most preferred stocks are cumulative, meaning that any unpaid dividends will accumulate and must be paid before any dividends can be paid to common stockholders. When this happens, the accumulated dividends are called dividends in arrears. Here's how to calculate what you are owed if it happens to one of your preferred stocks.

First, determine the dollar amount of each of your preferred shares' fixed quarterly payments. Preferred stock dividends are typically expressed as a set percentage of the par value, which is usually $25. For example, a preferred stock with a stated yield of 6% would pay an annual payment of $1.50 per share. There are a few preferred stocks with different par values, but you should be able to find any preferred stock's annual payment in its prospectus. Then, divide by 4 to determine the quarterly dividend per share.

Once you know the quarterly dividend per share, multiply it by the number of shares you own to determine your total annual preferred amount.

Finally, multiply the number of quarterly payments the company has missed by the total quarterly payment you're owed.

Be sure to subtract any partial payments the company may have made along the way. It's not uncommon for companies to simply reduce dividends during tough times, rather than suspend them entirely.

Remember, these are dividends that have to be paid before the company can pay any dividends to common shareholders. While there is no such thing as a truly guaranteed preferred dividend, preferred shareholders are higher on the priority list than common shareholders and therefore have more of a claim to the company's profits.

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