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What are Interim and Final Dividends?

If a company makes a profit in a year, that profit may be paid out to shareholders as dividends, or it may be retained in a reserve account. By law, dividends may only be paid out of profits for the current year or retained profits from previous years.

In Australia, it is general practice for companies to distribute two dividends per year. The first is called an interim dividend and is usually announced when the company reports its profit for the first six months. The second dividend is called a final dividend and is usually announced when the company reports its profit for the full year.

Some Australian companies only choose to pay a final dividend, but this is rare. Other Australian and some foreign companies listed in Australia follow the US pattern of announcing profits quarterly and pay four dividends a year.

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