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Interim Dividend & Types of Dividend [Detailed Info]



Interim Dividend
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Interim Dividend

An interim dividend is a dividend payment made before a company’s annual general meeting and the release of final financial statements.

The interim dividend is issued more frequently in the United Kingdom, where dividends are often paid semi-annually.

Directors declare an interim dividend, but it is subject to shareholder approval.

A dividend that is issued before the company’s final financial statement and annual general meeting are called Interim Dividend. This type of dividend is mostly seen in the UK because most of the companies offer six months of dividends there.

In the United Kingdom, a dividend fund with a gap of 6 months is called a semi-dividend. As you are seeing in the above statement, the director of the company can declare the interim dividend. But all Interim Dividend required final approval from the shareholders.

Friends to invest in a company and buying the share from the company are two different terms. And their profit and loss both are two different parameters. But the company’s good health is extremely important for both parties.

Because whenever a company goes into a loss, both the shareholder and the investor of the company have to incur losses in one way or the other.

Types Of Dividend

  1. Interim Dividend
  2. Final Dividend

1. Interim Dividend

An interim dividend is a dividend payment made before a company’s annual general meeting and the release of final financial statements.

2. Final Dividend

A Final Dividend is the dividend payment made after the company’s final general meeting and the release of the final statement.

Why Company Offer Interim Dividend?

As we know that all companies follow their specific strategies for market challenges. If everything goes well as per the company strategy and the company makes a profit then in any AGM meeting company directors announce interim dividends.

The main objective of announcing such a Semi dividend is to attract new investors and shareholders. The type of announcement reflects a good image of the company in the market, as a result, new investors invest money in that project.

This also benefits the Existing shareholders of the company as they get the dividend even after 6 months.

What Are The Risk Factor For Issuing Interim Dividend?

The company makes an estimate of its profit to pay the Interim dividend. But sometimes circumstances change with time and the company has to bear loss instead of profit.

Suppose a company is thinking of making a profit of 100 crores in the year 2020 and accordingly everything is also coming up.

Then the company can decide in its general meeting that we will give 1 crore rupees as a dividend to our shareholders this year.

And the company issues its semi-dividend, but only after some time, such circumstances arise that the company has to bear the loss.

Then the company will not offer any final dividend to its investors. And there may be some final terms for the final dividends.

Do Companies Offer Both Semi And Final Dividend?

To understand this, you have to understand what a dividend fund is. Suppose the company has to give Rs 10 crore as dividend fund to its shareholders after 1 year.

One cannot understand even from another example here. Suppose a company wants to give 20% of its annual profit as dividend money.

Suppose 20% profit is equal to 10 Crore Indian Rupees. And on this basis company issue it semi dividend.

Suppose the company earns more than 10 Crore after AGM(annual general meeting). Then the company will release its remaining funds.

But in some rare case company have to bear the loss and it will not release annual or final funds.

But in most cases companies offers both semi and final dividends. Friends if we will see in the US and UK then there are so many companies which offers Dividend funds on a net 3 months basis.

Their shareholders get dividends every trimester. And it very good for attracting new investors and shareholders.

Top 5 Ever Green Dividend [With 98% Profit Gurentee]

All top 5 companies described above are very important for facing any upcoming recessions. These companies have a very high yield and earn a good profit.

The five companies mentioned above are growing very well. And their future will be very good in the coming time. Their potential is very high.

Their investors are earning higher profits. We must take advantage of them. To increase profit, we have to keep increasing our information only then we can be successful in our life.

The key to success is to increase knowledge in life. Along with our knowledge, our earnings increase because time is equal for everyone. One should always be ready to learn everything that comes before you. This will give us success.

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