Final vs Proposed Dividend: Key Differences Investors Must Know
Final dividend is the actual cash payout approved by the board after year-end; proposed dividend is just the tentative amount announced earlier in results, awaiting confirmation.
Investors see both terms in annual reports and assume they’re the same. When markets swing, headlines swap “proposed” for “final” and confusion follows—especially around ex-dates and tax slips.
Key Differences
Proposed is a promise; final is a cheque. Proposed can be trimmed, skipped, or raised before shareholder nod. Final is locked once declared, with a set record date and payout timetable.
Which One Should You Choose?
You don’t pick—management does. Your focus is the gap between the two. A smaller haircut from proposed to final often signals steady cash flow; a big cut may hint at trouble.
Examples and Daily Life
Think of proposed dividend as the restaurant’s menu price; final dividend is the bill you actually pay. Menus can change, but the bill is what leaves your wallet.
Can a proposed dividend be cancelled?
Yes. Until shareholders approve, the board can revise or drop it entirely.
When is the final dividend certain?
After the AGM vote and official declaration; from that point it’s a legal obligation.