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How Much More Can Dividends Grow?

Despite fears of a dividend bubble, companies with long-term dividend-growth potential of 7%-9% per year remain very attractively valued, according to ClearBridge's Michael Clarfeld.


Shannon Zimmerman: Let's just speak broadly about the market, right now. You're a stock investor and so, there's a kind of incentive that goes for all stock investors: The market always looks attractively valued if you're selective in terms of the stocks that you choose. What's your view though of the market broadly. Is it overvalued? Fairly valued? Is it hard to find opportunities now relative to a few years ago?

Michael Clarfeld: Yes, I think that's a good question. So, I think, you're right that there is an inherent tendency among investors or people to sort of fall in love with the things they follow, and so, equity investors may always find equities attractive. That's it, I think actually our track record would demonstrate some differences there. If you look back at, our track record probably with [ClearBridge manager Hersh Cohen] in the late 1990s, when equities were incredibly overvalued, Hersh was over 20% cash. So, when we see huge disconnects, we're not afraid to take significant stances like that.

Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.