Interim dividend definition
/What is an Interim Dividend?
An interim dividend is a distribution to shareholders that has been both declared and paid before a company has determined its full-year earnings. Such dividends are frequently distributed to the holders of a company's common stock on either a quarterly or semi-annual basis. It is common for this dividend to accompany the release of a company’s interim financial statements.
The board of directors may set an interim dividend at a lower amount than the dividend that it issues following the release of the company's annual financial results, so that the interim dividend does not impair its ability to operate if the annual results turn out to be lower than initially expected.
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Types of Dividends
There are three types of dividends that a business may issue. They are as follows:
Interim dividend. These dividends are issued prior to full-year earnings having been announced, and are commonly issued on a quarterly basis.
Final dividend. These dividends are issued after an organization’s annual financial statements have been released. They may be higher than the amount of any interim dividends, since there is now more certainty about the amount of earnings from which dividends can be paid.
Special dividends. These dividends are one-time events that are paid when a business has generated exceptional earnings and wants to make a single payout to its investors. For example, a special dividend might be issued after an organization wins a major award from successful lawsuit.