The market is finding it hard to get excited about Coca-Cola Amatil Ltd (ASX: CCL). Although operating performance has improved over the past five years, shares are down 29% during that time, and down 20% in the past 12 months.

There’s nothing inspiring about management’s ‘mid-single digit growth’ forecast for the next few years, but at today’s prices Coca-Cola Amatil appears a low-risk investment idea that comes with a side order of income – a 5%, partly-franked dividend yield.

Growth avenues

Management is targeting mid-single digit growth in the core Australian and New Zealand businesses as a result of operational improvements and cost savings. The market is likely to remain subdued as a result of consumer shifts to healthy beverages and stiff competition, although Amatil is positioning its product portfolio to take advantage of changing consumer preferences.

Most recently the company reported double-digit growth in its Alcohol segment as well as its key Indonesian business. Their contribution to profit is small, but over the long term Amatil should be able to continue growing reliably, particularly in Indonesia.

Coffee provides another interesting growth segment with this area growing significantly. Demand for coffee on the whole has been growing rapidly in Australia in recent years, with businesses like Retail Food Group Limited (ASX: RFG) benefiting significantly. Whether Amatil can take a significant market share remains to be seen, but the coffee venture is a good opportunity.

A potential partnership with Monster Energy and recent new product launches (such as Fuze tea) in still and sparkling categories should also offer some growth potential.

On the downside, the Indonesian operating environment remains challenging and Amatil has hinted at another hit to profitability this year as a result of Rupiah depreciation against the US dollar. Australian domestic conditions remain subdued and Amatil expects to focus on improving its operations and product offering, which should in turn lift sales. If we assume the share price grows in line with profits, Amatil could deliver decent returns to shareholders.

It’s not a ‘sexy’ story but with strong cash generation, a reliable 5% dividend yield, and modest growth expected, Coca-Cola Amatil is well positioned to be a solid purchase in terms of total investment returns in the next few years.

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Motley Fool contributor Sean O'Neill owns shares of Coca-Cola Amatil Limited and Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.