Stocks are pulling back this week, but are still sitting near record highs.
Burns McKinney, portfolio manager at NFJ Investment Group, tells CNBC's "Power Lunch" on Tuesday he's a little concerned. "Valuations look slightly stretched across the board for U.S. equities," McKinney said.
In this environment, McKinney is betting on dividend-paying stocks.
"They should be more defensive in a stretched market. Due to financial repression, the supply of yield is hard to come by, and the demand remains high. Reversion to the means also has dividend payers well positioned now, and we think lift-off in interest rates would actually be a good thing for dividend payers," McKinney said.
The is up two percent year-to-date, while the Nasdaq is up five percent.