MarketWatch’s Mark Hulbert says that the stock market is “closer to undervalued” than overvalued, and that the market is “poised to produce above-average returns over the next couple of years.”

Using data from Investment Quality Trends, Hulbert looked at stocks of some of the “highest quality and most profitable companies, as defined by criteria such as an S&P quality ranking in the ‘A’ category, 25 years of uninterrupted dividends, and at least five dividend increases over the last dozen years.” Right now, only about 250 stocks make that list, he says.

IQT puts each of these stocks into one of four categories, depending on how its current dividend yield matches up against the historical range for the stock. Hulbert says his analysis found that a statistically significant inverse correlation exists between the percentage of those stocks that fall into the “overvalued” category and the market’s return over the next several years. The higher the percentage of those quality dividend-payers that are in the “overvalued” category, the worse future stock returns, and vice versa.

Historically, Hulbert says the average number of those dividend payers that have fallen into the overvalued category is 21%. Today, it is 13.8%. While that’s not as low as it was during some major bear market lows, it shows that “the gravitational pull exerted by this long-term dataset is towards higher rather than lower prices,” Hulbert writes.