Recent Buy – CCLAY

cclay

I enjoy visiting others’ blogs and reviewing their portfolios.  At times my investing approach is validated other times I get a fresh viewpoint.  There are occasions when a company that is not on my radar grabs my attention.  Such was the case when I ran across Dividenden Investor‘s holdings.  In his depot, Coca-Cola Amatil can be found.  The name Coca-Cola was the reason for my intrigue and just had to figure out what sort of creature this one was.

Coca-Cola Amatil trades on the Australian exchange under the symbol CCL with their ADR trading in the states as CCLAY.  They are one of Coca-Cola’s (KO) anchor bottlers under the 21st Century Beverage Partnership Model that KO is evolving towards.  Amatil’s territory includes Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa.  They are a bottler for Coca-Cola products plus liquor (Jim Beam, Maker’s Mark, et.al.), coffees and foodstuffs.  Coca-Cola has a 29% ownership.

Coca-Cola Amatil pays a dividend twice per year on an interim/final schedule with franking credits.  Recently, the credit has been between 75-100% which translates to no or minimal double taxation for US investors.  At yesterday’s purchase price, the dividend yield translates to roughly 5.9%.  There is a risk of currency fluctuation as dividends are declared in Aussie$.

This is a continuation of my theory of the US$ being overvalued so my intent is to buy while it’s high and collect increasing dividends through the exchange rate.  Of course there’s the risk the US$ will stay strong if a border tax is enacted.

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6 thoughts on “Recent Buy – CCLAY

  1. I agree on the interesting part. I think the biggest wildcard is the strength (or weakness) of the US dollar which has been on quite a roll. With this one, if the dollar weakens I get a boost in dividends (translated). If it doesn’t I still get a decent dividend. Thanks for the comment!

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  2. I tend to agree with some volatility as a result of a change in priorities with the new government. Unfortunately it’s tough to get a good read on the future with so many moving parts. The only thing certain is the US dollar is at historic highs. Who knows how long it continues? Anyway, I figure I have a little bit more time to add some more international assets – and perhaps get a clearer picture of what a Trump presidency really means. Thanks for the comment!

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  3. I like this buy. Soda habits are strong, I’d say similar to tobacco habits, they’re hard to break. And the countries this company covers have the same obesity problem as the US. I suspect soda is a popular drink of choice there.

    I’ve never heard of this company, but I have heard of some of the other KO ventures around the world. Another one I’ve watched over the years, but not purchased is CCE — Coca Cola European Partners. This one has a much more reasonable P/E ratio, low payout ratio, and a high dividend coverage ratio. I with I would have bought it last year, they paid a one-time special dividend of $14.50 per share! Anyway, it’s worth a look.

    Thanks for sharing.

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  4. Once I get through my end of year stuff I’ll do a post on my primary 2017 strategy. Highlights are international buys with an emphasis on KO’s 21st Century model. This continues this approach following my purchases of COKE, CCE and KOF prior to the election. The common theme is KO is retaining significant minority ownership stakes in these bottlers. I also like the diversification across non-KO products as well.

    Thanks for the comment!

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