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Interim Dividend vs. Final Dividend: Know the Difference

Shumaila Saeed
By Shumaila Saeed || Published on January 21, 2024
Interim dividend is a dividend paid before a company's annual earnings are calculated, while final dividend is declared at a company's annual general meeting after the year-end earnings are known.
Interim Dividend vs. Final Dividend

Key Differences

Interim dividends are distributed before a company’s financial year ends, reflecting confidence in expected profits. Final dividends are declared after the end of the financial year, once earnings are accurately determined.
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Shumaila Saeed
Jan 21, 2024
Interim dividends are often declared by the company's board of directors and do not require shareholder approval. Final dividends are proposed by the board but require approval from shareholders at the annual general meeting (AGM).
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Shumaila Saeed
Jan 21, 2024
Interim dividends can be issued multiple times within a financial year, depending on the company's performance and policies. Final dividends are typically declared once a year and are viewed as a more stable indication of company profitability.
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Shumaila Saeed
Jan 21, 2024
Interim dividends are usually smaller compared to final dividends, as they are based on estimated profits. Final dividends are generally larger, reflecting the company's confirmed financial position for the entire year.
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Shumaila Saeed
Jan 21, 2024
Interim dividends signify a company’s positive cash flow and financial stability during the year. Final dividends, on the other hand, represent the company's overall annual profitability and long-term financial health.
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Shumaila Saeed
Jan 21, 2024
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Comparison Chart

Timing

Paid before financial year-end
Declared after financial year-end
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Approval

By board of directors, no shareholder approval needed
Proposed by board, requires shareholder approval at AGM
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Frequency

Can be multiple times in a year
Typically once at the end of the financial year
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Size

Generally smaller, based on estimated profits
Usually larger, based on actual annual profits
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Financial Indication

Indicates positive cash flow mid-year
Reflects annual profitability and stability
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Interim Dividend and Final Dividend Definitions

Interim Dividend

An interim dividend is a dividend paid during a company’s financial year.
The board declared an interim dividend following the successful quarter.
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Shumaila Saeed
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Final Dividend

It is typically announced at the annual general meeting (AGM).
Shareholders voted on the proposed final dividend at the AGM.
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Interim Dividend

It is a distribution of profits before the year’s earnings are fully known.
Shareholders received an interim dividend based on projected profits.
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Final Dividend

Final dividends provide a stable return based on yearly performance.
The consistent final dividend indicated the company’s steady growth.
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Interim Dividend

Interim dividends reflect the company's confidence in its current financial performance.
The interim dividend was a sign of strong sales in the first two quarters.
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Final Dividend

It is declared based on the company’s actual profits for the year.
Following a profitable year, the board proposed an increased final dividend.
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Jan 07, 2024

Interim Dividend

Interim dividends are not guaranteed and depend on the company’s discretion.
Due to unexpected market conditions, the company opted not to pay an interim dividend.
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Final Dividend

A final dividend is a payment made to shareholders after a company’s financial year ends.
The annual report announced a generous final dividend.
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Interim Dividend

It's a periodic reward to shareholders during the financial year.
The tech company issued an interim dividend after a surge in revenue.
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Final Dividend

Final dividends represent a share of the company’s confirmed annual earnings.
The final dividend was adjusted to reflect the year-end financial results.
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Repeatedly Asked Queries

What determines the amount of an interim dividend?

The amount is based on estimated mid-year profits and the company's payout policies.
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Shumaila Saeed
Jan 21, 2024

Can interim dividends vary year to year?

Yes, they can vary depending on the company’s performance and strategies.
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Shumaila Saeed
Jan 21, 2024

Are interim dividends a sign of good financial health?

Yes, they often indicate positive cash flow and financial confidence.
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Shumaila Saeed
Jan 21, 2024

Can a company pay an interim dividend without profits?

Typically, interim dividends are paid from profits, but some companies may pay them from reserves.
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Jan 21, 2024

Can shareholders influence the final dividend decision?

Shareholders have a say through their vote at the AGM.
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What influences the size of a final dividend?

Final dividends are influenced by the company’s actual profits and dividend policy.
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Shumaila Saeed
Jan 21, 2024

Is the final dividend more significant than the interim?

Generally, yes, as it reflects the full year's profitability.
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Jan 21, 2024

Is it mandatory for companies to pay dividends?

No, paying dividends is at the discretion of the company.
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Jan 21, 2024

Do all companies pay interim dividends?

No, the payment of interim dividends depends on the company's policies and financial status.
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Jan 21, 2024

Are final dividends a reliable income source for investors?

They can be, especially for companies with a history of consistent dividend payments.
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Jan 21, 2024

How does a dividend policy impact dividend decisions?

A dividend policy guides how a company distributes profits as dividends.
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What happens to dividends in a loss-making year?

Companies may reduce or skip dividend payments in a loss-making year.
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Can a company retract an interim dividend once announced?

It's unusual, but possible if the company's financial situation drastically changes.
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Shumaila Saeed
Jan 21, 2024

Do market conditions affect dividend payments?

Yes, market conditions can impact a company's profitability and consequently its dividend payments.
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Shumaila Saeed
Jan 21, 2024

Are dividends taxed differently for interim and final?

Dividend taxation depends on local tax laws and is typically similar for both types.
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Jan 21, 2024

How does company size influence dividend payments?

Larger, more established companies are more likely to pay regular dividends, including interim and final.
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Shumaila Saeed
Jan 21, 2024

Can international investors receive these dividends?

Yes, international investors can receive dividends, subject to applicable tax laws.
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Shumaila Saeed
Jan 21, 2024

Do interim dividends affect the final dividend amount?

Yes, interim dividends are usually considered when determining the final dividend.
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Shumaila Saeed
Jan 21, 2024

Can both types of dividends be reinvested?

Yes, shareholders can often choose to reinvest both interim and final dividends.
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Shumaila Saeed
Jan 21, 2024

Is it better to invest in companies that pay regular dividends?

It depends on the investor's goals; regular dividends can provide steady income, but growth potential is also important to consider.
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Shumaila Saeed
Jan 21, 2024

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About Author
Shumaila Saeed
Written by
Shumaila Saeed
Shumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.

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