Barron's Streetwise Dividends For A Pricey Market
Sep 5, 2025
Matt Quinlan, Portfolio Manager at Franklin Templeton, discusses the implications of today’s expensive stock market. He delves into the importance of dividends as a source of income, especially in uncertain times. Quinlan shares insights on navigating high valuations and pinpoints key indicators for evaluating dividend-paying stocks. He highlights the evolving landscape of dividend stocks and suggests specific high-growth opportunities. The conversation also touches on how AI trends are reshaping investment strategies and dynamics in the market.
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High Valuations Forecast Lower Long-Term Returns
- High starting valuations historically predict weak 10-year real returns after peaks in the CAPE ratio.
- Deutsche Bank shows past valuation peaks preceded multi-decade poor nominal and real returns.
AI Is Concentrating U.S. Valuations
- Today's valuation extremes are largely concentrated in the U.S., driven by AI exposure in a handful of large stocks.
- Other G7 markets are cheaper but lack the same AI narrative that lifts U.S. valuations.
Strategists See AI Driving Further Gains
- Evercore raises S&P 500 targets based on an AI-driven earnings inflection and a stable macro backdrop.
- Their base case sees a 20% rise by end of 2026, with a wide bull/bear range reflecting uncertainty.
