When a cumulative preferred stock is issued in the middle of the year, do they get dividends in arrears for the full year? For example, lets say in July year 1 ,$100,000 10% preferred cumulative stocks were issued. No dividends were paid in year 1. Are there $10,000 dividends in arrears on 12/31 year 1 or only $5000?
I would say that it depends. Each company can have it’s own articles of association so for Company A, the preference shares might be eligible for the full dividend even if the shares were issued in the middle of the year while for company B, a shareholder might be eligible only for half dividend (or even no dividend at all for the first year).
So it depends and it can change from company to company but the most common thing to happen is that a shareholder will be eligible for half dividend.