# How to calculate preferred dividends

## Instructions

Find the dividend rate for the cumulative preferred stock. The dividend rate will be listed in the stock prospectus (available from the company or your broker). Normally the dividend rate is stated as an annual percentage of the par value (the price the stock was originally issued at).

Multiply the dividend percentage rate by the par value to find the dollar amount of the dividend per share. For example, if the rate is 8.0 percent and the par value is \$30 per share, the annual dividend per share is \$2.40. Divide this by four to find the quarterly dividend (\$2.40/4 = \$0.60 per share).

Check the company’s annual and quarterly reports to see if any cumulative preferred stock dividends have not been paid. If so, total the number of quarterly

distributions that have been missed and multiply by the quarterly dividend per share. For instance, if the quarterly dividend is \$0.60 per share and the company has missed three quarters, the accrued dividend is \$1.80 per share.

Calculate the total amount of accrued dividends for the cumulative preferred stock you own. Simply multiply the number of shares by the accrued dividends per share. If there are accrued dividends of \$1.80 per share and you own 100 shares, you have \$180 coming to you in addition to the regular dividend payments you normally receive.

Figure your next quarterly dividend amount if there are no accrued dividends. This is the regular payment and equals the number of shares multiplied by the quarterly dividend. With a quarterly dividend of \$0.60, this works out to \$60 for 100 shares.

Source: ehow.com

Category: Bank