It’s a Pattern: Earnings Rise, Dividends Fall

Corporate earnings are way up from a year ago.

Yet the number of companies raising dividend payments to shareholders is down--again.

Standard & Poor’s Corp., which tracks dividend trends, said 666 companies have raised quarterly dividend payments to shareholders so far this year. That’s down 9.3% from the 734 companies that raised dividends in the first four months of 1999, and down 23% from the number in the first four months of 1998.

The number of companies declaring extra dividend payments also has fallen this year, to 99 so far from 114 last year at this time.

Before the 1990s, many companies routinely raised cash dividend payments to shareholders when profits were good. But over the last decade, companies have grown increasingly stingy with dividends.

Many firms argue that shareholders don’t want increased dividend income because it is fully taxable. Instead, the companies say, shareholders prefer that earnings be used to buy back stock--potentially boosting share prices.

Whether a prolonged stock market downturn could make investors once again appreciate cash dividend income remains a much-debated question on Wall Street.