Noncumulative preferred stock, also known as noncumulative preferred shares, is a type of preferred stock issued by corporations as a way to attract investors and raise capital. Unlike cumulative preferred stock, which guarantees that any missed dividends will accumulate and must be paid to shareholders in the future, noncumulative preferred stock does not offer this same level of dividend protection.

With noncumulative preferred stock, if a company fails to declare and pay dividends for a specific period, the missed dividends do not accumulate or carry over to future periods. In other words, if a company decides not to distribute dividends to its noncumulative preferred stockholders in a given year, those shareholders have no legal claim to those unpaid dividends in the future. Instead, the company has no obligation to make up for the missed payments. The company can simply resume paying dividends when it deems it appropriate, without addressing the past non-payment.

Noncumulative preferred stock is often issued by companies that want to maintain flexibility in managing their dividend payments. It provides a degree of discretion to the company's management regarding when and how much to pay in dividends to their noncumulative preferred shareholders. This flexibility can be advantageous for companies, especially during periods of financial hardship when they may need to conserve cash by not paying dividends to preferred stockholders.

However, noncumulative preferred stock can be seen as riskier for investors compared to cumulative preferred stock since it lacks the assurance of eventually receiving missed dividends. As a result, noncumulative preferred stockholders may receive fewer or no dividends during lean times for the company.

Noncumulative preferred stock is a type of preferred stock that does not require a company to make up missed dividends in the future if it chooses not to pay them in a given period. While it offers flexibility to the issuing company, it carries more risk for investors who may not receive expected dividends when a company faces financial challenges. Investors should carefully consider the terms and features of preferred stock before investing in them.