Investors are betting on dividends as stocks in the US and the UK boost by a combined $1.2bn to $3.7tn this year.
The Dow Jones Industrial Average rose about 215 points, or 0.7%, to 19,937.
The S&P 500 rose about 6.3 points, to 2,963.
The Nasdaq gained 5.7 points, for a gain of 8.5%.
The dividend growth, while not huge, is significant, and is helping to fuel the broader rally in stocks.
“I’m not going to tell you how much I think the dividend growth will help the economy, but it is important to remember that the U.S. economy is in good shape right now,” said Michael Naughton, chief investment officer at Blackstone Asset Management.
“It’s not the end of the world.
The economy is very strong, but the Fed has to continue to tighten monetary policy and keep a lid on inflation.”
The S&s Dow Jones index of stocks rose 6.9%, or 0% to 16,638.
In the US, the Dow rose 7.7% to 25,942.
The Russell 2000 climbed 3.6%, or 1.6%.
In Britain, the S&ams Russell 2000 index of shares rose 5.6% to 2.9.
Elsewhere in Europe, the DAX rose 3.4%, or 2.6%; the FTSE 100 rose 3%.
Bond yields rose to 0.4% on the New York Mercantile Exchange and 0.5% on London’s FTSEurofirst 300 index.
Analysts are expecting a stronger-than-expected US recovery and are predicting a rebound in US growth this year, driven by the rise in the Dow and S&p.
Shares of Apple Inc, Amazon.com Inc and Facebook Inc have surged this year despite a slowing China economy.
There are signs the recovery is starting to accelerate, with consumer spending rising this year and household incomes rising faster than expected.
Despite the strong economic performance, the Fed will have to keep tightening its stimulus package, which will be closely watched.
Bonds have risen in value over the past year as interest rates have fallen.
The Federal Reserve raised interest rates in December for the first time in six years, as the economy improves and inflation rises.
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