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In spite of 18 straight quarters of double-digit profit growth and estimated fourth quarter 2006 cash holdings of $608 billion, U.S. companies seemed to maintain an iron grip on their ordinary dividend payouts in 2006. According to a recent report from Standard & Poor’s, only 1,969 companies, or 28.1%, out of 7,000 publicly held stocks raised dividends in 2006–only 1% more than in 2005. Instead they opted increasingly for one-time dividend payments and special dividends–which jumped 14.3% to 622 in 2006, up from 544 in 2005. “Companies are still timid [following] the decline of the market in 2000 to 2002,” says Howard Silverblatt, a senior analyst at Standard & Poor’s. Moreover, managements are loath to raise ordinary dividends “because there’s a big penalty for cutting [them],” he says. “An ‘extra’ is a single event, a special situation–you do not have to repeat it. And what it does is it gives you a little bit more time to formulate your policy and see what 2007 is going to look like.”

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