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6 May, 2015 - 17:10

Preferred shareholders are assured of receiving dividends before any common shareholder. When preferred stock is participating, preferred shareholders can share in excess profits with common shareholders. Nonparticipating preferred stock is limited to a fixed dividend. When a preferred stock is cumulative, the preferred shareholder is entitled to all dividend payments in arrears before any common shareholder can be paid a dividend. A preferred stock that is both cumulative and participating is the most attractive to investors.