Low U.S. interest rates can only support the stock prices of the few companies that consistently produce earnings growth, strategist Simeon Hyman said Friday.
The Federal Reserve has yet to follow up on an initial quarter percent rate hike in December, leaving investors to search for yield elsewhere. Policymakers have indicated they intend to hike rates twice this year, but that would still leave monetary policy relatively loose.
Still, the remains mired in an earnings recession. Earnings for the first quarter are on track to end the reporting period down more than 5 percent from the previous year, according to Thomson Reuters I/B/E/S. Excluding the energy sector, S&P earnings are roughly flat.
Hyman, head of investment strategy at Proshares Advisors, said companies that have delivered earnings growth of more than 2 percent this season, such as dividend growth names, represent an elite group.
"If you look at stocks that have a really long track record of dividend growth, you've got about 50, 60 names in the S&P 500, but on average they've shown up with growth. And they're a little expensive, but not much compared to the rest of the market, and not much compared to their history," he told CNBC's "Squawk Box."
Looking at the broader market, Hyman said the impact of the energy sector is diminishing.
"It's a melting ice cube. They dropped 50 percent last year, and they had a big impact on the S&P 500. If they drop 50 percent again, by simple math, they'll only have half the impact," he said.
Oil prices have risen more than 80 percent from their lows in the first quarter. That could provide some lift in the stock market, but companies that generate earnings will remain the standouts for the time being, he said.