Jeremy Siegel appeared on CNBC this morning and provided his views on where to invest during this time of economic upheaval in Europe and a still unclear environment in the U.S.. He is the famed professor of the Wharton Business School and former economic advisor for McCain during the 2000 presidential race. He is perhaps best known for his studies of dividend paying stocks which are regarded as gospel as far as dividend research goes. The following are key takeaways from his interview:
Siegel points out that it is crazy to get upset when your dividend payers go up and down when you’re buying them for income when at the same time you’re okay with your bond values going up and down when you’re buying them for income as well. If it’s a long term bet, forget about the market fluctuations.
Siegel is author of “Stocks For The Long Run” and champions a strategy of buying and holding dividend paying securities. However, he said he is not much of a stock picker and prefers to use dividend paying ETFs for his personal portfolio.
Siegel discusses how Gold only has roughly 1% price appreciation less inflation. In other words, it’s not an investment tool. If anything, it is just a hedge against inflation and nothing more.
He suggests that Europe is cheap at 8 to 9 times earnings. The U.S. is also cheap at the moment at slightly higher.
Siegel sees the potential for 15% stock appreciation through the end of 2012 from current levels. He remains bullish on stocks over the long term and dividends as one of the key components of total returns over time.
My take on all of this: Siegel is often typically bullish on equities as it is and though I do not feel stocks are currently at bargain levels, I do enjoy hearing him reiterate his views on dividends for the long haul. Stick with dividends, they work.
