Wharton professor Jeremy Siegel (right) is a long-time market commentator.
REUTERS/Steve Marcus
- Jeremy Siegel has said he sees the S&P 500 rising 9% in 2022 and that stocks are the place to be.
- The Wharton finance professor said investors should be owning dividend-paying stocks to protect against price rises.
- The Federal Reserve is likely to hike interest rates sharply in 2022 as it grapples with the strongest inflation in 39 years.
The S&P 500 could soar 9% in 2022, and investors should hold dividend-paying stocks as inflation shoots higher and interest rates rise, Wharton finance professor Jeremy Siegel has said.
Asked on Wednesday whether a rally to 5,100 or 5,200 by the benchmark US stock index seems realistic, Siegel said: “Yes. It does.”
“People are gonna say I’ve gotta be in real assets as interest rates are going to go up … Stocks are the place to be,” he told CNBC anchor Scott Wapner.
The S&P 500 closed at 4,726.35 Wednesday. A rally to 5,150 by year-end would be a 9% increase.
Siegel said he’s worried about inflation, and that he thinks the rate of price rises will stay hot as wages grow.
But he said stocks will still do well, because they’re the only asset that has a chance of outstripping price increases. Siegel has long argued for the so-called TINA hypothesis: that “there is no alternative” to equities.
Stock markets have been rocked in the early weeks of 2022 by expectations that the Federal Reserve will soon turn off the stimulus taps as it tries to tame inflation. US consumer price index inflation hit 7% year-on-year in December, its highest level since 1982, data released Wednesday showed.
Read more: A longtime bull and chief strategist at Truist Bank names the 4 best sectors to target in 2022 — and makes the case for why history is on stocks’ side despite high volatility
Siegel, a long-time market commentator, told CNBC’s “Halftime Report” stocks that pay good dividends are a solid bet.
“Dividend stocks are protected against inflation because firms have been able to raise their prices, their cashflows, and increase their dividends,” he said. “And I think that’s what investors are going to seek in 2022.”
He added: “You have dividend-paying stocks [with yields of] 2.5%, 3%, 3.5%, 4% — well-protected dividends that are rising, and you have capital gains.”
The Wharton professor said he thinks the “rotation” in stock markets is set to continue.
The rotation refers to investors’ move out of tech stocks that fared well during the pandemic, when interest rates were at record lows. They are switching to companies such as banks and energy companies, which stand to do better from higher interest rates and inflation.
Siegel said in December that he thinks equity markets may start to wobble in late 2022 or 2023, but said stocks tend to fare well in the first year of interest-rate hikes.
Read the original article on Business Insider 
