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Coca-Cola Amatil Ltd, BHP Billiton Limited & Woolworths Limited: Should you buy?

With low interest rates here to stay, income-hungry investors continue to push the S&P/ASX 200 (INDEXASX: XJO) higher with many of the nation’s blue chip stocks becoming more and more expensive as a result. While it is imperative that every portfolio maintains a strong core made up of these well-established corporations, it is just as important that investors pay a reasonable price for them.

With that in mind, it’s worth looking at whether Coca-Cola Amatil Ltd (ASX: CCL), BHP Billiton Limited (ASX: BHP) and Woolworths Limited (ASX: WOW) are worth your dollars today. Each present as strong businesses and are amongst Australia’s most widely held stocks.

Coca-Cola Amatil Ltd

While the Australian stock market has been climbing higher and higher, Coca-Cola Amatil has been going against the flow with its stock down 27.6% in the last 12 months. Competitive pressures in Australia and inflationary pressures in Indonesia are amongst the issues impacting its overall profitability and the near-term doesn’t look like getting any better.

However, we (capital ‘F’) Fools know that it is the long-term that really counts, and these short-term blunders are the opportune time to pick up shares on the cheap. As a shareholder myself, I accept that the stock could well fall over the coming months – or maybe even the next year – but I believe now is an excellent time to buy for good long-term returns.

BHP Billiton Limited

While it’s been a rollercoaster ride for shareholders of BHP over the last year, the last few weeks have been particularly painful. Since the eve of its full-year earnings report, the stock has dropped just under 8%, largely as a result of tumbling iron ore prices. Indeed, the shares are down 0.3% once again today after the commodity dropped a further 0.9% overnight.

Quite clearly, the stock has remained volatile and is leveraged to moving commodity prices. However, the miner maintains a heavy focus on reducing costs, paying down debt and improving productivity, which should see its profits grow in the long term. With the shares now trading below $36.60, they could be a reasonable buy for long-term focused Fools.

Woolworths Limited

Woolworths has long been adored by Aussie investors for its superior capital gains and reliable dividend payments and its Masters home improvements chain could help it achieve further growth in the coming years. However, the rollout of international stores like Aldi, Costco and even Amazon.com, Inc. could impact its ability to grow sales in its supermarket chain over the coming years, making the stock look quite expensive.

At $35.82, the stock is trading on a P/E multiple of 18.1 and a Price-Book ratio of 4.4 while it is yielding just 3.8%, fully franked.

A high-yielding alternative you don’t want to miss

In light of the low interest rate environment, investors seem to be most attracted to stocks with generous dividend yields. While Coca-Cola Amatil and BHP Billiton could tickle their fancy, the Motley Fool’s top analyst, Scott Phillips, has recently uncovered an incredible alternative.

With solid growth prospects and a grossed up 6.4% dividend yield, this stock could be a huge winner for your portfolio over the coming years. Click here now to discover the name and code of our #1 dividend-paying stock for 2014-2015. It's FREE!

Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd and Amazon.com, Inc.

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