US Equities

Pity the equity investor. Over the last year
the chorus of voices expressing concern at the
dizzying valuations in the US market has grown
louder.

Yet they are too scared to leave and miss
the continued bull run. Their cause for concern
seems obvious. The S&P 500 price relative to
earnings has traded at a decade-high for most of
the last three years.

But what if investors are
watching the wrong metric? What if it is not
earnings-based valuations but dividend-based
ones that hit a peak in 2018 and that
cause a reckoning in equities? Here, we consider
that investors’ lack of focus on
dividends may lead to an unexpected shake up
in the equity market.