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S&P Capital IQ chief equity strategist Sam Stovall weighs in on dividend payouts and where to put your money in the markets.
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Sell -- potential tax increase lending.
In particular for dividends companies are trying to get a jump on the fiscal cliff and are paying dividends early before January 1 joining me today to discuss this -- More of -- market outlook is Sam stove -- S&P capital I keep chief investment strategist.
Again let's get more Sam on these early dividend payouts and I know you there just put out your outlook for 2000 -- But what is it like a twelve month that outward looking target right that's right so go ahead I know it's 1550 on the S&P were just about 14100 today so.
-- that's pretty significant a thousand point move on the S&P.
-- there.
Basically it's had about a 150 point move it's about a 10% he could increase in price and obviously -- the good question really could be how could really come up with any kind of a forecast.
Based on all of the -- issues out there the debt ceiling fiscal cliff.
We had a relatively weak summer time in terms of earnings gains etc.
-- have you ever seen -- more complicated time for investors post election.
Where the markets were favoring -- Romney victory clearly didn't get fat and now as we inch toward this fiscal -- the issues that you just raised you know what advice would you give to clients investors in general.
I think basically you have to look beyond the valley.
What we're doing is we're looking at global GDP and we're seeing that that basically around the world whether it's developed nations are emerging markets.
That the trough is likely to be seen in the fourth quarter or no later than the first quarter of 2013.
Corporate earnings here in the US are likely to be tracing out.
That sort of -- flattened V shape because we think that we come through.
The slump in earnings we're seeing an improvement in housing so.
I would tend to say basically just stick with your equity exposure at this point.
Don't start to lighten up -- anticipating a big sell off.
One of the most popular investments of the last year as he know has been the dividend payers and this is the crux of -- interview today in our question is.
With these companies moving up the dividend payout dates to avoid the likelihood of a higher tax.
-- still going to be a popular stock by the dividend payers especially where we still have these historically low interest rate.
I think it will because of what you just -- that we're looking at the yield on the ten year note of the little more than one and a half percent.
You can get a variety of the companies that are paying 3% or more you don't have to be a pig -- go out 5% 6% or more.
But focused on their history of -- track record of increasing their earnings and dividends look to dividend yield to 3% or more.
And obviously focus on those that have buy recommendations and less likely to cut their dividends.
Don't be a -- Connecticut that -- in mind that's great in Pakistan so many different aspects.
Bigger picture though do you think because we are facing higher taxes on dividends overall capital gains they'll just be less.
Fewer dollars invested in US markets or will lead.
Drama if you will going on the rest of the world in the troubles you mention -- global economic slowdown we're seeing oil fall because of that concern today as well.
Mean just fewer dollars to put into the markets and their people just gonna hold their cash.
Well if if they hold their cash then they're going to be losing even more because they get 0% return.
And they end up losing whatever inflation happens to be and I always say you don't sleep better at night by putting your money under your mattress because -- makes noise when -- roll over.
And you get basically no return whatsoever so.
You have to just be smarter as to where you put your money and I still think at a higher interest -- Quality stocks -- paying a good dividend will be more attractive than bonds.
Okay thank you so much Sam Stovall always Greek PM thanks -- and good luck I know that your offices were severely damaged by hurricane sandy -- that's.
Another house of forty but replied you guys are finding your business and all things that -- political audience remaining -- best they can't thanks -- -- -- him so stay.
