How to Calculate Interim Dividend

Most listed companies pay a dividend to their shareholders half-way through the year. This is known as interim dividend. In other words, it is a dividend declared and distributed before the company's full-year earnings have been determined. Here you'll learn how to calculate interim dividends:

Example:
LMN Company has the following share capital as at 30 June Year 10:
Authorized share capital:
12,000,000 5% Preference Shares of $0.50 each: $6,000,000
28,000,000 $0.50 ordinary shares: $14,000,000

Allotted and fully paid capital:
7,000,000 7% Preference Shares of $0.50 each: $3,500,000
20,000,000 $0.50 ordinary shares: $10,000,000

During the year, LMN Company paid the preference share dividend in full, and an interim dividend of $0.03 per ordinary share. Then:

Preference dividend paid = 7% * 7,000,000 * $0.50 = $245,000
Interim ordinary dividend paid = $0.03 * 20,000,000 shares = $600,000

* Next: How to Calculate Proposed Dividend
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