Disappearing Dividends?

Ending payouts may be a good thing for investors

Cash dividends to shareholders are disappearing quicker than Bill Clinton's credibility. Last year companies in the Standard & Poor's 500 paid out only 37% of their earnings as dividends, an all-time low. The average payout since 1945 is 52%. Corporate stinginess has helped drop the S&P 500 dividend yield (dividend divided by stock price) to 1.6%--so subterranean that merely calling it an all-time low doesn't do it justice. It is less than half the postwar average yield of 4.1% and way below the previous low-water mark of 2.6% in 1987.

The case of the disappearing dividend isn't hard to solve. As...