Preferred stock holders are always paid dividends before common stock holders. They are also guaranteed to receive dividends. If a company does not feel that they do make enough in profits, they have the option to not pay dividends out. When this happens preferred don't get paid. Since they are guaranteed to be paid dividends, they will get back pay for previous years of no dividend distributions. This is called being in paid in the arrears. ABC Corp. has 1,000,000 shares of common stock and 300,000 share of cumulative preferred stock. The annual dividend on the preferred stock is $2.25 per share and no dividends were paid last year. This year the board of directors decide to distribute 4,100,000 in dividends. You own 100 shares of ABC Corp.. How much will you receive in dividends?