Cincinnati-based Macy's, which slashed its quarterly dividend to 5 cents a share from 13.25 cents in early 2009, said May 11 it will double the payout to 10 cents. The same day, the second-biggest U.S. department-store chain boosted its 2011 profit forecast to as much as $2.45, above analysts' projections of $2.35 a share according to the average of 14 estimates compiled by Bloomberg.

Intel, the world's largest chipmaker, also raised its dividend May 11 by 16 percent to 21 cents, while Target, the second-largest U.S. discount retailer, announced June 8 a 20 percent boost in its dividend to 30 cents.

"Conditions for better corporate profits will be there for the next couple of years, barring some catastrophe," Carey said. "If this is going to be a normal business cycle, we have a lot of growth still to come."

Earnings, adjusted for depreciation and inventory costs, surged at an average annual rate of 29.9 percent in the eight quarters through the end of 2010, the strongest such growth in more than half a century, according to the JPMorgan report, which Mellman wrote with Chief Economist Bruce Kasman.

'Enormous' Gains

The "enormous" gains came despite little help from the economy, Mellman said. Adjusted for inflation, growth averaged 1.5 percent a year during the period. Businesses also lacked the power to raise prices during the final months of the recession, which ended June 2009, and in the early stages of the recovery.

Given this backdrop, the profits rebound is sustainable for at least three years, albeit at less lofty growth rates, Mellman said. The latest figures show earnings rising at a 5.3 percent annual pace in January-March from the prior quarter, while gross domestic product expanded 1.8 percent.

Companies are starting to get relief from energy costs, as crude oil has fallen 13 percent from this year's peak of $113.93 on April 29. Businesses also have more clarity on the parts- supply shortages caused by the March earthquake in Japan, and a rebound in motor-vehicle production is "a bullish sign" for the labor market, said Joseph Carson, director of global economic research at AllianceBernstein LP in New York.

"We have a lot of positives lined up," Carson said. "Unless we see a big change in underlying conditions such as balance-sheet strength, record liquidity, pent-up demand and easy monetary policy, I doubt the economy is at risk."

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