What is a final dividend?

Last Updated: 2 Sep 2025

One of the many benefits of stock trading or investing in company stock is dividends. The part of profit distributed equally amongst shareholders by the company is called a dividend. Though a dividend is not an obligation, companies reward their shareholders for investing in the business through dividend distribution. There are various types of dividends like interim, special, regular or final dividends. So, what is final dividend? To answer this question, this blog presents the detailed concept of final dividends.

Understand Final Dividend

A Final Dividend is an amount declared by the board of directors after the company issues its financial statements. It is declared in the Annual General Meeting (AGM), once the BOD is sure of the company’s financial health, cash flow, liquidity and other factors. No special resolution is required in the articles of association to declare the dividend. However, once the final dividend is declared, the company can not reverse the decision.

The corpus fund for the final dividend is differentiated from total profit after retaining funds for further business needs. The amount of final dividend is usually forecasted by analysts or even by the board members themselves in their earnings guidance. The final dividend declared by the company, in this case, is also referred to as a revised or adjusted final dividend.

Not every company issues dividends, but those companies that declare dividends regularly may have a set of policies defined to give consistent dividends or have a gradual increase in them over the years.

Example Of Final Dividend

The final dividend example best suits this scenario: Suppose ABC Ltd. issues a final dividend of Rs. 2 per share at their annual general meeting, and an investor holding 500 shares of that company, then the investor shall receive Rs. 1000 as the final dividend.

For the next year, if the company decides to double the dividend and declares Rs. 4 per share, investors will receive Rs. 2000 as a final dividend. The final dividend is usually paid in cash out of reserves. This brings us to the final dividend meaning, which is essentially the confirmed dividend payout based on full-year financial results. 

How Is The Final Dividend Calculated?

The amount of dividend is multiplied by the number of shares to get the total dividend. For example, when a company records ₹8 per share as a final dividend and assuming it has an outstanding share of ₹7.5 lakh, the final payout will be about  ₹8 crore. This calculation assists in the determination of how much money the company will pay out, as well as allows the shareholders to calculate their dividend profits.

What are the Key Characteristics of Final Dividend?

For shareholders, understanding its key features helps you know what to expect and when. To know more, the main characteristics are discussed here:

• Duration: Final dividends are typically declared at the end of a financial year after the company’s yearly statements have been prepared and audited financial statements. This ensures that the divided distribution is based on accurate and verified financial terms
• Shareholders’ Decision: The declaration of a final dividend is subject to shareholder approval during the annual general meeting. 
• Non-Compulsory: Final dividends are not mandatory, and the decision to distribute a final dividend depends on the company’s financial health. 

How is an interim dividend different from a final dividend?

The final dividend is usually a bigger amount than the interim dividend because, during the financial year, the company might not be fully aware of the cash flow availability and future contingencies.

The board of directors announces the interim dividend and is subject to the shareholders’ approval, while the final dividend is declared in the AGM post final earnings. Declaration of interim dividend requires a provision in articles of association.

Final Dividend Vs. Liquidating dividend

The final dividend is declared at the end of the financial year. It can be declared multiple times over the years. While the liquidating dividend is paid when the company ceases to exist and declares the termination of operations. It is a one-time payment made to its shareholders at the time of liquidating the company.

The final dividend is paid from the profits of the company while liquidating dividend is paid from the capital base of the company. The capital base is the leftover amount the company has after paying off the debts and liabilities from selling the assets.

Conclusion

A final dividend is a portion of the company’s profit distributed to shareholders at the end of the financial year. It is declared after assessing the financial health, which is not mandatory. Unlike interim or liquidated dividends, it is paid for capital. However, you must hold shares on the record date to receive them.

Frequently Asked Questions

Who will get the final dividend?

Every shareholder is entitled to receive the final dividend if they are holding shares on the record date as declared during the AGM.

What are the different important dates for dividends?

Few dates are important for an investor while receiving a final dividend. The first and foremost important date to notice is called the declaration date when the dividend is announced.

The next important date for any shareholder is the record date, which means the date on which a shareholder should have shares in the Demat account to be eligible for receiving dividends.

The third significant date is the ex record date. It is the date on which an investor must buy the shares to get them credited in the Demat account on or before the record date.

The last date an investor should remember is the payment date, on which the dividend is credited to the bank account.

What must be passed to declare the final dividend?

An ordinary shareholders resolution must be passed and should be aligned with the company’s policy to declare the final dividend in the annual general meeting post-approval of financial statements by auditors.

What is the final dividend in the share market?

Final dividend is declared by the company at the end of its financial year on the basis of profits made by it. It is the last dividend paid for that year, and it is approved by shareholders at the annual general meeting.

How is the amount of the year-end dividend decided?

The company’s board of directors decides the year-end dividend amount by evaluating its overall profitability, cash flow, and future investment needs. They aim to balance rewarding shareholders while maintaining funds for growth.