An Interim Dividend is a type of dividend payment declared and distributed by a company's board of directors during the fiscal year, before the company's final profits are determined at the year-end. These dividends are often issued based on the company's performance in the early part of the financial year and serve to provide shareholders with a return on their investment without waiting for the end of the financial year. The payment of an interim dividend typically reflects a company's confidence in its financial stability and performance, to the extent that it can distribute profits to shareholders before year-end accounts are finalized.

For example, a company might declare an interim dividend during its mid-year financial reporting, after realizing a substantial profit in the first two quarters. The dividend per share is then distributed to shareholders on record by the payment date set by the board of directors.

Interim dividends can differ from final dividends in terms of the timing and the amount distributed. They generally require the approval of the board and do not always demand the same regularity or predictability as final dividends. This flexibility makes interim dividends a useful tool for reward distribution based on periodic successes.