| Points | Dividend | Interest |
| 1. Meaning | The dividend is the return payable to the shareholders of the company for their investment in the share capital. | It is the return payable to the creditors of the company. For e.g.
Debenture holder, Deposit holders. |
| 2. Intervals | Dividends need not be paid on regular basis and they can vary according to the company’s profits. | Interest has to be paid at regular intervals at a fixed rate. |
| 3. Given to whom | It is paid to the member i.e. the owners of the company. | It is paid to the creditor of the company. |
| 4. Expense | Dividends are not the expense as they are based on the profit made. If no profit, they are not paid for that period. | Interest is the expense to the company. |
| 5. Rate of Dividend | The rate of the Interim dividend is lower than the final dividend. | The rate of the final dividend is always higher than the Interim dividend. |
| 6. Obligation | It has to be paid only when the company made profits. | It is not linked to the Profits of the company. It is an obligation for the company. |
| 7. When payable | It is payable when a company earns sufficient profit. | It is payable every year irrespective of the profits of the company. |
| 8. Rate | It is paid at a fluctuating rate to the equity shareholders. | The rate of Interest is Fixed and predetermined at the time of issue of the security. |
