The inevitable journey back to monetary normality

Dividend yield and growth seem primed for a renaissance

While stocks in general remain attractively priced, a significant rotation within the stockmarket is highly likely in the period ahead - this rotation is potentially damaging for the current positioning of many stockmarket investors.

Over the past five years, the march of stockmarkets to historic highs has been increasingly driven by an expansion in the market multiple. In effect, equity investors have been prepared to pay higher prices without the compensation of a commensurate rise in earnings.  In turn, this meant that the traditional longer-term drivers of stockmarket returns - dividend yield and dividend growth - have been all but irrelevant to the market advance. The expansion of the market multiple - what Warren Buffett famously calls the positive mood of ‘Mr Market' - has dominated all. How has value...