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DIVIDEND HIKES ON THE UPSWING

But the yield on stocks stays slim

Don't look now, but Standard & Poor's, a division of The McGraw-Hill Companies, reports that the number of companies increasing their dividend payouts rose 14% last year to 2,171--a 16-year high. And the amount of dividends paid on the S&P 500 index was up a solid 8%, the largest rise since 1990.

Still, with profits last year up even more, the share of profits paid out in dividends was one of the lowest on record. And with stock prices still rising, the dividend yield on the S&P 500 remains at a historical low of around 2%.

The slim dividend yield doesn't necessarily mean that stocks are dangerously overvalued. Edward S. Hyman of International Strategy & Investment Group Inc. notes that in inflation-adjusted terms the yield is not especially low. In fact, the only times it has been higher since the late 1960s was in the mid-1980s and the past few years.

By GENE KORETZ


Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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