W. Bell & Co., declared its first cash dividend yesterday, announcing that it would begin paying stockholders a quarterly dividend of 2 1/2 cents a share.

The announcement came at the same time the catalogue showroom company reported record profits of $2.7 million ($1.36 a share) for the year ended June 25, up 89 percent from the previous year's earnings of $1.4 million (72 cents).

The increase in earnings came despite a 7 percent decrease in sales, to $125.4 million from $134.6 million.

Bell Vice President Martin Pfeifer said the decrease in sales was caused by the recession and the company's decision to "keep our promotions down. . . . We determined that we didn't want as many sales promotions because they eroded our profit margin. . . . We wanted to increase our profit margin."

Fourth-quarter profits reached $951,600 (48 cents) compared with a loss of $73,000 (4 cents) in the previous fourth quarter. Sales for latest quarter were up marginally, to $28.7 million from $28.5 million.

The cash dividend is in addition to the company's continued stock dividend policy, under which the company declares a 10 percent stock dividend on outstanding common stock. The stock dividend will be paid on Nov. 30 to stockholders of record at the close of business Nov. 9.