Record 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.
Bloomberg reports margins will climb to 8.9% in 2011, the highest level in at least 18 years, according to data compiled on non-financial companies in the Standard & Poor’s 500 Index through March 11. Greater profitability combined with dividend cuts during the credit crisis have pushed earnings to 6.53% of the gauge’s price, or 3.5 times more than its payout rate, close to the record 3.6 multiple in January.