Noncumulative Preferred Stock refers to a class of preferred shares that do not accumulate unpaid dividends. If the issuing company fails to declare dividends in any given period, shareholders of noncumulative preferred stock forfeit the right to receive those missed dividends in the future. This characteristic distinguishes it from cumulative preferred stock, where unpaid dividends accumulate. Noncumulative preferred stock is often considered less favorable for investors seeking consistent dividend income.
