Is Coca-Cola Amatil Ltd (ASX: CCL) an ASX dividend share that should be in your retirement portfolio?
Today, the market seems to think so. Amatil reported its full-year earnings this morning, which included a 6.5% increase in total revenue and a 1.5% increase in earnings per share. The company also maintained its final dividend at 26 cents per share.
In response, the Coca-Cola Amatil share price has jumped 6.77% in trading today and is going for $12.86 at the time of writing – a seven-year high.
But at this high, is Coke really worth adding to a portfolio?
What is Coca-Cola Amatil?
Just to be clear, Coca-Cola Amatil isn’t ‘the’ Coca-Cola Company. The ‘mother’ Coke is a US-listed stock that owns a share of Amatil – which is really a bottling company that is licensed to manufacture the US Coca-Cola Company’s products.
So no, Amatil isn’t the company that Warren Buffett famously owns.
But regardless, the two companies’ fates are still intertwined.
What’s there to like in Coca-Cola Amatil shares?
Coca-Cola Amatil is still a great company in my opinion. The Coca-Cola stable of brands (including Sprite, Fanta, Coke and Lift) has multi-generational appeal, despite the ‘not-healthy’ stigma often attached these days.
You have to pay attention to a company when its products are collectable, in my opinion.
Apart from the soft-drinks, the company has a staggering range of other beverage brands in its portfolio including the Mother energy drink, Mount Franklin bottled water, the sporty Powerade, Barista Bros coffee, Zico coconut water, Deep Spring and Vitamin Water.
The attractive thing about this kind of business is its recession-resistant nature. In good times and bad, people are going to buy a Coke, an iced coffee or a water. It’s not normally the first thing to go if the family budget gets pulled in a notch.
Consumers usually buy these drinks for a small reward or treat and that’s a powerful force behind demand for a product.
Is Amatil in the buy zone today?
Its for these reasons, I think Coca-Cola Amatil is a great stock to have in a retirement portfolio. The company has a fairly robust dividend, which looks to be on an upwards trajectory over the coming years.
The company also plans on restoring the franking credits on its dividends to above 50% next year, which is also a good sign for income investors.
But in saying this, the current Coca-Cola Amatil share price isn’t cheap on today’s levels. The company is trading on over 30 times earnings, which is quite high for a ‘slow-and-steady’ business like Coke.
This time last year, you could have picked up the same shares for under $8 – which would have been a far better entry point in my view.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.