We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is an Interim Dividend?

Malcolm Tatum
By
Updated: May 17, 2024
Views: 8,036
Share

An interim dividend is a partial dividend payment that is issued to shareholders at the discretion of a company’s board of directors. This type of dividend is often extended after the interim or mid-year auditing of the company’s accounting records takes place. Directors typically assess the progress of the business during the first half of the year and issue a somewhat conservative partial dividend based on their expectations of how the company will perform for the remainder of the business year. In most instances, an interim dividend is less than the final dividend that is issued once the final accounting for the business year is completed and accepted.

The issuance of an interim dividend is common in a number of countries around the world. Shareholders with investments in companies based in the United Kingdom often receive this type of partial dividend payment shortly after the second quarter of the business year is completed and the financial accounting has taken place. In other nations, companies may or may not provide mid-year dividend payments to shareholders, depending on governmental trading regulations that may apply, and the provisions found in the companies' articles of incorporation that pertain to the issuance of stock and stock dividends.

In nations where an interim dividend is relatively common, directors typically assess the outcome of the company’s finances during the first half of the year, using data that was collected during the mid-year audit. This information is considered along with the projected performance of the corporation for the remainder of the business year. At that point, the directors will determine what they feel is an equitable interim dividend amount for distribution.

It is important to note that the process of determining the amount of an interim dividend is not based solely on the most recent performance of the business. Company officers rarely assume that performance levels for the second half of the year will equal the levels achieved during the first half. More often, directors will assume that the remaining two quarters of the year could possibly generate lower returns, and allow for that possibility when calculating the amount of the interim dividend. This means that directors may conservatively extend a mid-year dividend that amounts to thirty or forty percent of the dividend that is anticipated to come due after the financial year is closed out. Doing so helps to insulate the company from potential downturns in revenue or other events that could negatively impact the return on the issued shares.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Editors' Picks

Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
Share
https://www.wisegeek.net/what-is-an-interim-dividend.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.