Australians stocks are attractive and market returns, from dividends and earnings growth, may be as much as 15 per cent in the next year, says Paul Taylor, head of Australian equities at FIL Investment Management (Australia) Ltd.

Taylor says the Australian market is currently valued at about 10 to 11 times earnings and a five per cent dividend yield.

Australian stocks have historically traded at between 14 to 15 times earnings, he says. “It is hard to see the Australian market” trading at 10 to 11 times earnings in the next year, says Taylor.

“The Australian market is currently very attractively valued,” he says. “It is very realistic to expect Australian market returns of 10 per cent to 15 per cent over the next 12 months from dividends and earnings growth, even without a valuation uplift.”

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