Puerto Rico Guaranty of Payment of Dividends on Stocks is a mechanism or provision that ensures the payment of dividends to stockholders in Puerto Rico. Under this guarantee, companies are legally bound to make dividend payments to their shareholders, thereby offering a level of security and assurance to investors. This guarantee serves as a protective measure for shareholders, as it helps safeguard their investment and ensures that they receive a fair share of the company's profits. It is designed to boost investor confidence in Puerto Rican companies and encourage investment in the local stock market. There are several types of Guaranty of Payment of Dividends on Stocks in Puerto Rico: 1. Mandatory Dividend Guaranty: This type of guarantee requires companies to pay a minimum dividend to their shareholders, which is often a percentage of their profits. The exact percentage can vary depending on the regulations and policies set by the Puerto Rican government. 2. Discretionary Dividend Guaranty: In this case, companies have the option to pay dividends to their shareholders based on their discretion. However, the Puerto Rican government may have certain guidelines or regulations in place to ensure that dividends are distributed fairly and transparently. 3. Cumulative Dividend Guaranty: Under this guarantee, if a company fails to pay dividends in a particular year, those dividends accumulate and become a liability for the company. This means that the accumulated unpaid dividends must be paid in future years before any additional dividends can be distributed. 4. Preferred Stock Dividend Guaranty: Some Guaranty of Payment of Dividends on Stocks in Puerto Rico may specifically apply to preferred stockholders. Preferred stockholders receive priority in terms of dividend payments over common stockholders and are often guaranteed a fixed dividend amount or a dividend based on a predetermined formula. It's important for investors to understand the specific details and terms of the Guaranty of Payment of Dividends on Stocks, as they can vary from company to company and may be subject to change over time. Consulting with a financial advisor or conducting thorough research is advisable before making investment decisions in Puerto Rican stocks.