Despite corporate America’s continued banner days, the money didn’t flow over for income-hungry investors this year, as companies were less generous than expected with their dividends.

Only 295 companies in the Standard & Poor’s 500 raised their dividends this year, down from 306 last year, S&P reports. Six companies started paying dividends, down from 10 in both 2005 and 2004.

Overall, dividends increased 11% this year, shy of the 13% analysts had expected.

Companies may be sheepish with dividends, but investors want them. Nearly 70% of investors want companies to pay dividends, not just use excess cash to buy stock, according to a poll by Eaton Vance.

Dividend-paying companies in the S&P 500 gained 16.4% this year, easily outstripping the 12.7% gain of the non-dividend-paying companies.

The reason dividends are not as robust as expected could be due to a calm after a dividend payment explosion. The size and number of dividends paid by companies skyrocketed beginning in 2003, when Congress cut the maximum tax rate on dividends from 38% to 15%.

Also, other than investing in new equipment, companies have two choices for their piles of cash: stock buybacks and dividends, and buybacks are winning. This year, companies are expected to spend $437 billion buying back stock, dwarfing the $246 billion they will spend on dividends.

Companies are also facing a drop-off in profit growth after enjoying an unprecedented 18 consecutive quarters of double-digit earnings gains. It’s hard to commit to a dividend that needs to be paid every quarter no matter what, when there’s uncertainty about future profits, says Duncan Richardson of Eaton Vance.

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