Types of Dividend

 Types of Dividend       

A dividend is the portion of a company's profit distributed to its shareholders. The major types are:

  1. Cash Dividend – Dividend paid to shareholders in cash.
  2. Interim Dividend – Dividend declared and paid during the financial year before the annual accounts are finally approved.
  3. Final Dividend – Dividend recommended after the end of the financial year and declared at the company's Annual General Meeting (AGM), subject to applicable law.
  4. Stock Dividend / Bonus Shares – Distribution to shareholders in the form of additional shares instead of cash.
  5. Special Dividend – A non-recurring dividend paid in addition to the company's regular dividend.
  6. Property Dividend – Dividend distributed in the form of assets or property rather than cash.

Interim Dividend vs Final Dividend

Basis

Interim Dividend

Final Dividend

Meaning

Dividend declared during the financial year

Dividend declared after the financial year

Timing

Paid before finalisation of annual accounts

Paid after the financial year-end

Declaration

Declared by the Board of Directors

Recommended by the Board and declared by shareholders at the AGM, subject to applicable law

Basis

Based on available interim/current financial results

Based on the company's annual financial results

Frequency

Can be declared more than once during a year

Normally declared once for a financial year

Purpose

Provides shareholders with an earlier return

Provides the final dividend for the completed financial year

Adjustment

It is generally considered while determining the total dividend for the year

Represents the final dividend for that financial year

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