Dividends Are Climbing Since 2003 Tax Cuts; Investors Start Noticing; S&P Beating Nasdaq In '04; Lower-tax, higher payouts seen as more attractive with "normal' market gains.(A)

Byline: CRAIG SHAW

As techs and small caps sailed higher in the market's yearlong rally, dividend stocks were left out in the relative cold. But the outlook may be improving for these former market fossils.

April 15 marks the end of the first filing season since dividend taxes were slashed to a top rate of 15%. Tax refunds are expected to grow by $50 billion this year, in part due to dividend and capital gains tax breaks.

President Bush signed the tax cuts into law last May, two months after the Nasdaq began its rally. But as beaten-down techs doubled and tripled from basement levels, little attention went to dividend stocks.

"The factors leading investors into speculative stocks were even greater than the factors helping high-quality dividend stocks," said Don Taylor, …