Fund Managers Demanding Higher Dividends

The number to watch is the dividend payout ratio -- the percentage of profits that companies hand back to their investors. Saryan calculates that, across the U.S. market, it's just 31%. And that's barely risen over the decade because profit growth has so outstripped dividends. "We're really almost right back where we started from in 2000," she says.

Hardly anyone in the stock market knows their history anymore, so there are two important points to mention. The first: Back in the dim and distant past, before the irrational exuberance of the 1990s, the payout ratio on Wall Street was routinely well above 40%. So there's a lot of room for payouts to rise.

The second: Over the long term, investors have traditionally made the bulk of their profits from dividends rather than simply from rising prices.

The caveat to all this is that money has been pouring into dividend income funds of all types for at least a year, sending their prices rocketing. So this may be a time to dip your toe in the water, rather than to dive in headfirst.

A case in point is Saryan's closed-end fund, (ETO Quote)Eaton Vance Tax Advantaged Global Opportunities, which issues a fixed number of shares and trades throughout the day on an exchange as a stock does. At times in the past three years, it's been possible to buy this fund at a bargain-basement 14% discount to its underlying assets. Right now, the discount is less than 2%.

(Saryan also co-manages the (EDIAX Quote)Eaton Vance Dividend Income and (EADIX Quote)Tax-Managed Dividend Income funds.)

As often, finding good investments and finding the right times to buy are separate matters.