Dividend is the portion of profit distributed by company to their shareholders in proportion of shares held by them.If a company is not making profit at all, it is unlikely to pay dividend to shareholders. However company can declare dividend out of previous years proift subject fulfillment of certain condition ( Plz refer company act for detail). It is an appropriation of profit.

Interest is paid by company against the money it has borrowed at a fixed rate of interest.It is a charge against profit. For instance Interest paid by company against cash credit account.

ya agree with prashant..so if company don't pay dividend there are no consequences but it did not pay interest then it may face problems..

Agreed with Mr. Prasant.

Very good clarification by Mr.Prasant. For further reference, you can have a glance on any good book, based on the Shares & Dividend.

Addition

Dividend is payable on equity shares and preference share.Whereas interest paid on loans.

Dividend paid on preference share is of fix rate whereas dividend paid on equity shares is suggested by Board of Directors and decided by share holders in Annual General Meeting. 

There is also a dividend called interim dividend paid by the company to Equity share holders if it has sufficient profit to pay as dividend. Interim dividend is the dividend paid between to AGM (i.e. before final dividend) is called interim dividend.

Few other points can also be given for clarification of difference between interest and dividend

1- Interest is a fix liability and compulsory to pay every year or at the time it due whereas dividends depend on the profit company only pays the dividend in the year in which it has sufficient profit to pay.

2. Interest is low risk return whereas dividend involves high risk returns.

3. Generally loans on which interest is paid is repayable after a certain period whereas shares remains till the life time of company and company pays dividend till life time if it earn profits.

Above are the only few points hope the you got the answer. You can ask more if you have any confusion about the topic.

Thanks...

I Aggree and  Good  answar  Mr.Prasant