Telstra Corporation Ltd, National Australia Bank Ltd and Coca-Cola Amatil Ltd: Should you buy?

The best part about being long-term investors is that we get to enjoy endless capital gains potential and, if we do our job right, sustainably growing dividend yields.

Buying great companies at a good price and letting the business compound our money for many years, is a recipe for success provided by investing legends such as Benjamin Graham, Warren Buffett and many more.

Today, with interest rates low, investors will be looking keenly at the likes of Telstra Corporation Ltd (ASX: TLS), National Australia Bank Ltd (ASX: NAB) and Coca-Cola Amatil Ltd (ASX: CCL). However, not all are a standout buy at current prices. Here’s what you need to know…

Telstra has enjoyed a tremendous run up in price over the past few years, as its CEO David Thodey sought to transform the telco away from its legacy businesses and poor customer service. However, despite a juicy 5.2% fully franked dividend, it’s not a buy. Its share price is simply too high to justify an investment at today’s levels and although shareholders would be advised to keep holding, potential investors should look elsewhere for top ideas.

NAB, our biggest bank by assets, hasn’t had such a good run over the past five years. With shares climbing just 11.3%. Its lacklustre performance can be put down to its disastrous UK exposure and poor profitability, relative to its peers. Despite offering a 6% fully franked dividend yield, investors would be wise to keep their distance until we see either a cheaper price or a departure from foreign markets.

Lastly, shares in Coca-Cola Amatil have significantly underperformed the S&P/ASX 200 (INDEX^: AXJO) (ASX: XJO) in 2014, falling 23% versus a return of 0.4% from the index. The company recently completed an operational review and is aiming for a return to sustainable profit growth in the near future. Although this process may take a few years it is forecast to pay a 4.4% partially franked dividend in the next 12 months. Indeed, at today’s prices Coca-Cola Amatil looks to be a good long-term buy and hold for both income and modest growth potential.

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Motley Fool Contributor Owen Raszkiewicz is long June 2016 $5.41 warrants in Coca-Cola Amatil.    

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