Glossary: Zero dividend preference shares

A class of share in a split capital investment trust. Holders of zero-dividend preference shares (ZDP) waive their right to any income from the trust (which is paid to the income shareholders) but instead get a predetermined level of growth payable when the trust winds up and also any financial residue left in the trust not paid out to the holders of income shares. The payout on a zero is not guaranteed and so they are not without risk. However it is claimed that, since zeros were invented some 20 years ago and as each split-capital trust has come up to its maturity date, all issues have been paid in full and on time.

Relevant to: Stocks & shares

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