Accrued Dividend Law and Legal Definition

Accrued dividend refers to an accumulated unpaid dividend on preferred stock. It is a regular dividend that is considered to be earned but not paid. It is also known as accrued dividend.

The following is an example of a case law on accrued dividend:

The existence of accumulated dividends does not create a debtor-creditor relationship between the corporation and the preferred stockholders. The right to accrued dividends is merely a preference as against the common stockholders and the right to receive such dividends does not come into existence until their payment is properly authorized and directed by declaration or otherwise. [Cox v. Sellers, 26 Del. Ch. 350 (Del. Ch. 1942)].