In another sign of a business revival, U.S. companies increased their dividends last month at the strongest rate in a decade, Standard & Poor's said this week.
"Dividends obviously are being helped by the pickup in the economy in the past few months, which is lifting corporate profits and cash flow," said Arnold Kaufman, an analyst at S&P, one of Wall Street's main credit rating agencies.Kaufman said the S&P survey, which encompassed nearly all publicly traded companies in the United States, reflects growing business confidence. He said the continued economic expansion is expected to result in companies announcing even more dividend increases in 1994.
Many corporations pay out a portion of their profits to stockholders in the form of a quarterly dividend, which varies from company to company. During a recession, companies sometimes choose to cancel or suspend their dividend payments in order to conserve cash, as was the case with many bank stocks in 1990.
For 1993, S&P said U.S. corporations boosted dividends 1,635 times, an increase of 23 percent from activity in 1992 and the best year since 1989.