Coca-Cola Amatil Ltd (ASX: CCL), National Australia Bank Ltd. (ASX: NAB) and Macquarie Group Ltd (ASX: MQG) are iconic Australian businesses which have produced mixed returns over the past 10 years. Macquarie tends to do really well in bull markets, and is the only company whose share price has outperformed the S&P/ASX200 Index (ASX: XJO) (INDEX: ^AXJO) in the past 10 years – but only by 11%.
However, with dividends included, each has outperformed the market. So with that in mind, are investors who chose to buy these three blue-chips today locking in more mediocre returns? Or are they worthy of your investment dollars? Here's what I think you can expect from these three.
Coca-Cola Amatil
CCA is one of the world's top five Coca-Cola bottlers which operates in Australia, New Zealand, Indonesia and three other Pacific nations. CCA's core business has provided the company and its shareholders with steady growth over recent decades, but its exposure to the ready-to-eat-fruit and vegetable snack markets has cost it dearly. However, its recent profit downgrades and short term macroeconomic headwinds (including Indonesia's labour cost inflation) have given savvy investors a chance to pick up a quality company at a discounted price. I think any price under $10 per share (currently $9.40) is a good long-term 'Buy'.
National Australia Bank
In a low interest rate environment perhaps surprisingly, NAB, our fourth-biggest bank, is offering a grossed up dividend of 8.4% yet continues to lose ground on its major rivals. But this phenomenon isn't new to NAB shareholders, since its shares have gained just 7.8% since 2004. Sure, the dividend has enabled investors to beat the market but I don't think investors who want both a dividend and market-beating capital gains should buy NAB at current prices. Its exposure to the UK has significantly harmed NAB's reputation and outlook for the near future.
Macquarie Group
Macquarie, our leading investment bank, is an obvious beneficiary of the rallying stock markets worldwide as well as improving confidence in the global economy. Longer term, I believe Macquarie will prove to be a worthwhile buy to hold investment given its exposure to North America and, more importantly, Asia. Its Macquarie Securities, Macquarie Capital and Macquarie Funds businesses will be key drivers of growth in the next decade. Although I like Macquarie in the long term, given we're in the midst of a bull market, the shares don't come cheap and short-term growth appears priced into the stock, so I suggest wading into it slowly (i.e. buying a little bit at a time).
Is this the BEST DIVIDEND stock on the planet?
Macquarie Group and Coca-Cola Amatil appear to be solid long-term investments which will have volatile earnings (and share prices) from time-to-time, but hold competitive advantages in their industry, giving them a head start over competitors. Each also offer strong cash flows which increases the prospect of bigger dividends payments in the future.
