As the S&P 500 topped all-time highs on Monday, a markets expert with Federated told attendees at the Raymond James Women’s Symposium that if the firm is correct in its reading earnings, dividends and economic trends, it’s “very dangerous” for investors to be bearish on stocks.
(The index closed at 1,744.66, its third record close in a row, and is up about 22% this year.)
Linda Duessel, a senior equities strategist, also explained why the firm maintains that a dividend-oriented strategy is optimal. “We have been different,” she explained to some of the 340 guests at the event, which is taking place this week in St. Petersburg, Fla.
The S&P could hit 2,000 in 2014, according to Federated, with economic growth of 3% or better.
Back in 2009, the firm called market conditions those of a secular bull market, “when I, personally, didn’t didn’t want to believe it,” joked Duessel. “But this is a new buy-and-hold [period], and so far, so good.”
She noted how the market is not moving sideways but, instead, is progressing in a stair-step pattern. And, along with several economic indicators, Federated expects the “economy to accelerate by the end of year and into next year.”
While the U.S. economic recovery has been tepid, Federated has raised its GDP growth estimate for 2013 from 1.1% to 1.7%.
“We also expect price-to-earnings expansion,” Duessel said. Corporate earnings are at all-time highs, she notes.
A recent study commissioned by Federated found that high-net-worth investors may be more willing to embrace dividends to get the income they need than advisors might think, the speaker said.
When it comes to income, 30% of those surveyed picked bonds and 50% said equities/balanced funds. “You can’t get yields or safety with bonds,” Duessel said. “A dividend strategy is your bond surrogate.”