In all the talk about mutual funds nowadays, it’s remarkable how seldom you hear the word “dividends.”

Interest in the subject is running lower than the average yield on the stocks in the Standard & Poor’s 500 Index, which has sunk to record depths of around 1.2 percent. Until very recently, anything below 2.5 percent was considered a danger sign for the market.

As a selling point for funds, the idea of dividends seems just about dead. By my unofficial tally, there are 1,567 long-term (other than money market) funds big enough and old enough to be included in Morningstar Inc.’s research service. In that whole roster, five have the word “dividend” in their names.

As it happens, those five run by managers Fidelity Investments, Franklin Resources Inc., T. Rowe Price Associates Inc. (one each) and Morgan Stanley Dean Witter & Co. (two) averaged a 1.6 percent return in 1999, about what you could get on a good interest-bearing checking account.

It wasn’t always like this, and it isn’t like this now in every corner of the world. In Canada, for instance, you can find dozens of mutual funds with “dividend” in their names.

Whether you like them or not, dividends are a long-established staple of investing. By the reckoning of the Vanguard Group, the second-largest fund firm with $540 billion in assets, dividends supplied about two-fifths of the annual average return of 11.2 percent in the stock market from 1925 through 1999. Without dividends, in other words, stocks would have a hard time beating bonds, even in this great bull market.

One reason for the dearth of “dividend” funds in this country is the fashion for naming funds by the size and type of the stocks they invest in, rather than the objective they pursue. A fund that specializes in mature dividend-paying stocks may now call itself a “large-cap value” fund rather than a “dividend income” fund.

That’s not the main issue, though. Funds aren’t pushing dividends these days because there isn’t much in the way of dividends to promote and if there were, ample evidence suggests that fund investors wouldn’t care.

In an era when the S & P; 500 Index has returned more than 20 percent annually for five years running, nobody gives much thought to whether a stock’s dividend yield is 4 percent, 2 percent or nothing at all.

Instead of raising their dividends, many corporations today opt to buy back stock, a strategy that can bolster the share price while dodging taxes. Every dividend payment, whether on common stocks or mutual fund shares, comes with an income tax liability, at ordinary income rates of up to 39.6 percent.

Capital gains on stock price appreciation, on the other hand, are taxed at no more than 20 percent if you hold an investment for more than a year. “Dividends have lagged far behind corporate earnings growth,” says Richard Moroney, editor of the investment advisory letter Dow Theory Forecasts in Hammond, Ind. “Dividend yields have continued to drop even with the recent bounce in bond yields.”

These two facts are important. They establish that companies have de-emphasized dividends by choice, and that the market endorses that decision. This raises the prospect that, where dividends are concerned, the old days are gone and aren’t ever coming back.

To believe that the change is permanent, however, may presume that investors will remain forever fixated on the promise of a bright future. Eventually, all successful investments must take the form of a cash return. In times when hope isn’t running sky high, the emphasis shifts toward sooner rather than later. Dividends are well designed to serve “sooner” demand.

Though dividend-focused funds are out of favor right now, their strategies are anything but faddish. The $3.9 billion Franklin Rising Dividends Fund, for instance, looks for companies that have paid “consistently rising dividends” over the past 10 years. Its top holdings include Family Dollar Stores Inc. and West Pharmaceutical Services Inc.

The $1 billion T. Rowe Price Dividend Growth Fund focuses on companies already paying dividends that show the promise of increasing those payouts leading it to big holdings in such stocks as Bristol-Myers Squibb Co. and Fannie Mae.

Said Price manager Bill Stromberg in his latest shareholder bulletin: “While we are disappointed to see investors shun well-managed growth companies that can increase their dividends, we believe their attractive valuations and long-term prospects will return them to favor.”

Chet Currier is a columnist for Bloomberg News.