Well, last week I was on vacation, so I didn’t unveil a new dividend pick. This week I’m sort of sitting back and celebrating the gains I see across my portfolio, and then jolting upright and worrying about whether the stock market is overvalued.

This Motley Fool article by Matthew Frankel is one of the factors adding to my gut feeling that maybe it’s better to sit on the sidelines rather than add shares or buy into a new name for my portfolio. The article does a good job of explaining the “Buffett Indicator” and why measuring the capitalization value of all public U.S. companies relative to the economy is one tool to try to determine if stocks are expensive or cheap. I’m not one to try to time the market, but when things start to look frothy I’m inclined to sit on the sidelines. And when a particular stock seems to ascend into “irrational exuberance” territory, I’ll trim my stake and take some gains. With the Buffett indicator at an all time high, perhaps we should be bracing ourselves for some kind of correction. But there are no guarantees in the stock market.

While there are a number of dividend stocks I’m keeping an eye on, this week nobody wins the pick-of-the-week award. That’s partly because I’m lazily recovering from vacation mode, and partly because I think valuations across the broad market are stretched a bit high right now. Nonetheless, I’m confident that by next week I’ll find a dividend payer that seems ripe for recognition.

 

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