Goldman Sachs: Market's going nowhere for a year

Kostin: Cyclicals & lower valuation good strategy for environment

Now that the S&P 500 has staked yet another record high, the stock market indicator may have nowhere else to go.

Goldman Sachs analysts believe the index may climb a bit higher before its ascent is over at least for the next 12 months. Strategist David Kostin and his team see the index rising to 2,150 in the next couple of months—another 1 percent or so from its mid-day levels Monday—before seesawing around and ultimately settling around 2,100 by year's end.

The next 12 months hold little prospect for gain, according to the analysis, with the index at just 2,125 in 12 months, which would be basically flat from here. (Tweet This)

The forecast comes as Wall Street deals with economic growth considerably slower than expected and a backdrop in which the Federal Reserve will have to weigh its desire to increase interest rates against decidedly weakening fundamentals. Goldman holds to a forecast that the Fed will hike in September, but futures market traders now assign just a 52 percent chance the central bank will tighten even in December, with just a 20 percent for a September move.

In the face of dwindling returns, investors could have little else but dividends to count on. Goldman forecasts that all of the 2 percent gain in total return by the end of the year will come from dividends, which are expected to account for 46 percent of market returns for the next 10 years. By contrast, prices have accounted for 80 percent of total return during the current bull market, which has seen the S&P 500 surge about 220 percent since the March 2009 low.