Interim Dividend is a type of dividend declared and paid by a company to its shareholders before the end of the financial year, typically after the release of quarterly or half-yearly financial results. It is distributed out of the profits earned during the ongoing financial year, unlike a final dividend, which is declared after the companyís annual financial statements are finalized.

The decision to declare an interim dividend is made by the companyís Board of Directors, without requiring approval from shareholders at the Annual General Meeting (AGM). This allows companies to reward shareholders promptly when business performance has been strong during part of the year.

Interim dividends are usually paid in cash, though in some cases, they can be issued in the form of shares (known as a bonus issue). The amount and timing depend on the companyís profitability, available cash reserves, and future capital requirements.

For example, if a company earns significant profits in the first two quarters, it may declare an interim dividend in the third quarter to share the earnings with investors. Later, after closing the annual accounts, it may also declare a final dividend if sufficient profits remain.

Key differences between Interim and Final Dividend:

• Timing: Interim dividends are paid during the financial year, while final dividends are paid after year-end.
• Approval: Interim dividends are approved by the Board; final dividends require shareholder approval at the AGM.
• Source: Interim dividends are paid from current-year profits; final dividends are paid from full-year profits.

In summary, an Interim Dividend reflects a companyís strong financial health and commitment to rewarding shareholders throughout the year, providing them with a steady income stream before the final financial results are declared.