U.S. equity valuations may be on the expensive side, but money can still can be made in stocks, said T. Rowe Price Asset Allocation Group specialist Darrell Riley. 'Two and a half percent dividend yield, one and a half percent buy-back yield, six percent earnings growth,' said Riley. 'That’s really not so bad when you’re comparing that to cash returns at zero.' And while that U.S. outlook may not thrill investors used to high returns since the financial crisis, Riley said they can do far better in Europe and Japan where valuations are still low and the stimulus is just getting started. 'We’ve got slowing momentum in the U.S. and we’ve got cyclical recovery in Europe and Japan,' said Riley. 'We’ve got QE (quantitative easing) in Europe, QE in Japan, and we’ve got tapering in the U.S. You know that combination is favoring Europe and Japanese equities over the U.S.' Further afield, Riley remains bullish on the emerging markets despite worries that a rate hike by the Federal Reserve will unduly impact developing economies. Riley added that T. Rowe tends not to look at emerging markets as a 'unitary asset class because there’s so much dispersion' by country and by sector.