â€œRecord earnings fueled by the highest profit margins since 1993 are giving executives more leeway than ever to boost dividends as the bull market enters its third year.
Margins will climb to 8.9 percent in 2011, the highest level in at least 18 years, according to data compiled by Bloomberg on non-financial companies in the Standard & Poorâ€™s 500 Index through March 11. Greater profitability combined with dividend cuts during the credit crisis have pushed earnings to 6.53 percent of the gaugeâ€™s price, or 3.5 times more than its payout rate, close to the record 3.6 multiple in January.
A total of 95 companies led by Aetna Inc. (AET) and Carnival Corp. have raised dividends as the fastest economic expansion in six years and five straight quarters of earnings growth increased confidence among chief executive officers. Of the 380 that pay dividends, 378 are forecast to maintain or increase them, according to data compiled by Bloomberg using options prices, profits, management statements and peer comparisons.â€
â€œâ€¦ record earnings â€¦â€
â€œâ€¦ the fastest economic expansion in six years â€¦â€
â€œâ€¦ five straight quarters of earnings growth â€¦â€
â€ â€¦ highest profit margins since 1993â€¦â€
What on earth is that Marxist Kenyan doing to the American economy!?!?!?
Of course, if studied too closely, those numbers do tend to undercut the conservativesâ€™ favorite economic theory that working Americans have too much bargaining power and demand so much in pay and benefits that the poor besieged businessman simply canâ€™t make a profit these days.
But hey, who cares, right?
Bring me some caviar and champagne, Jeeves, and have Stanley bring the Rolls around to the front door. And quickly!
â€“ Jay Bookman