Coca-Cola Amatil Ltd (ASX: CCL), Telstra Corporation Ltd (ASX: TLS) and Macquarie Group Ltd (ASX: MQG) are three iconic Australian companies with big dividend yields and competitive advantages over their peers.
Whilst the share price of CCA has fallen 28% in the past year, Telstra and Macquarie have both outperformed the S&P/ASX 200 Index (ASX: XJO) (INDEXASX: XJO) to notch up gains of 10.6% and 27.6%, respectively. And that's before dividends!
Coca-Cola Amatil
The fall in CCA's share price has been the result of controversially missed profit forecasts over the past 24 months. The catalyst for the lower-than-expected earnings were rising labour and input costs in its key growth market Indonesia. A price war between supermarket giants Coles and Woolworths, a price war with fellow beverage giant Schweppes and intense competition from foreign companies with cheaper imports within its tinned fruit business SPC Ardmona.
No shareholder likes to see their business go backwards but from an investor's perspective, the recent pullback provides a great long-term buying opportunity. Whilst the potential for further falls is very real, if you ever wanted a cheap entry point into one of the world's most powerful brands, it is on offer now with CCA.
Telstra Corporation
In the past three years, when dividends are included, an investment in Telstra has returned over 100%. With a growing Network Application Services (NAS) division and an International expansion, Telstra is likely to grow earnings modestly in coming years.
Although I remain bullish on Telstra in the long term, its share price has caught up with its potential and I believe it trades around fair value. So, despite boasting a big dividend yield, I think Telstra is not a 'Buy' but a 'Hold'. As you'll see below, there's many other big dividend alternatives available at cheaper prices.
Macquarie Group
When worldwide equities markets rally so too will shares in Macquarie Group, our biggest investment bank. Macquarie has a broad range of expertise covering everything from mortgages and funds management to corporate finance and commodities research.
In the long run, Macquarie will continue its push into the emerging markets of Asia as well as niche market areas of finance. Despite boasting a total shareholder return of 40% over the past 12 months, there could be upside potential left in Macquarie's current price. However, investors who decide to buy in now must be able to stomach the feeling of buying shares in an investment bank during a bull market – something I'm not willing to do.
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Of these three blue-chips, I think Coca-Cola Amatil is the best buy at current prices. However I'm not denying there's a real possibility it could fall further if it disappoints when its reports half-year results on August 20.
