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Here's the Truth Behind the Recent Market Rally

That said, no one could argue that U.S. stocks are extremely cheap or represent the extreme values they offered in 2009. However, given that central banks, including our Federal Reserve, have pledged to keep interest rates low for quite some time, that the global economy continues to gain strength and that corporate earnings are expected to continue to rise, we suspect stock prices will also rise. Even in periods when they don't, we remind investors that dividends have historically accounted for just under half of the total return of the market as a whole.

So, the truth behind this rally is that many like it will come -- and more importantly, go.

Expect market volatility to remain at the forefront. Additionally, a short-term correction, perhaps as steep as 10%, should be expected as a normal course of market action.

However, over the longer term, we believe conditions for further gains are present, and that high-quality dividend paying stocks are a great foundation of a growth oriented portfolio. Short-term rallies and corrections will soon be forgotten: It will all come down to continued economic growth and rising corporate earnings in a low-inflation environment that, so far, looks promising.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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