Semiannual: Definition, Example, vs. Biennial and Biannual

What Is Semiannual?

Semiannual is an adjective that describes something that is paid, reported, published, or otherwise takes place twice each year, typically once every six months.

For example, a semiannual event could happen in January and July or June and December. In this example, if a bond pays semiannually, the bondholder would receive a payment in January or July, or June and December. The term is most often used in a financial context.

Understanding Semiannual

Semiannual is simply a word that denotes an occurrence twice a year. For example, a company could have company parties semiannually, a couple could celebrate their marriage semiannually, and a family could go on vacation semiannually. Anything that happens twice a year happens semiannually.

If a corporation pays a semiannual dividend to its shareholders, the shareholders will receive dividends twice yearly. (A corporation can choose how many dividends to distribute each year—if any.)

Financial statements or reports are frequently published on a quarterly (four times per year) basis. It is rare that corporations publish financial statements only semiannually. They do, however, publish an annual report, which per the definition, occurs once every year.

Semiannual is important to understand when purchasing bonds. A bond is usually described in the yield that it pays the bondholder. For example, a $2,000 bond could have a yield of 5%. It is important to know if this 5% is paid annually or semiannually to understand the payment you would receive as the bondholder.

For example, if the bond paid the yield annually, the bondholder would receive $100 a year. Now, if the bond paid the yield semiannually, the bondholder would receive $200 a year. This is an important distinction to note when purchasing bonds.

U.S. Treasury bonds pay a yield semiannually.

Semiannual vs. Biennial

While semiannual is an adjective that describes something that happens twice in a single year, biennial is a word that describes something that happens every two years. Understandably, biennial is often confused with the word biannual, which means the same thing as semiannual: something that happens twice a year.

Example of Semiannual

Company ABC has performed well in the last five years, continuously making a profit and growing earnings. The company decides it will start paying its shareholders dividends to distribute a portion of the earnings. ABC's management decides it will distribute a dividend of $0.50 for every share.

It also decides that the dividend will be distributed on a semiannual basis; the shareholders will receive one dividend payment of $0.50 twice a year for a total dividend amount of $1 for the year. The dividends will be distributed in June and in December.

The Bottom Line

Semiannual refers to events that occur twice every year, usually six months apart. It means the same as biannual. It is commonly used in a financial context, such as how often bonds pay interest. The term can be confused with other similar-sounding terms, such as biennial, which means an event occurring every two years. It's important to understand the differences to ensure you are understanding the financial impact of financial products, such as bonds and dividends.