We always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%: 10% for the increase in stock price and 3% for the dividends paid.
With the market pushing through to all-time highs, we are looking for solid total return ideas for investors. In fact, we screened the Merrill Lynch US 1 portfolio list for companies that may offer some good plays for total return in the firm’s top picks. All are rated Buy at Merrill Lynch
Coca-Cola European Partners
The former Coca-Cola Enterprises reported solid earnings and recently completed a big merger. Coca-Cola European Partners PLC (NYSE: CCE) is the leading Western European marketer, producer and distributor of nonalcoholic ready-to-drink beverages and one of the world’s largest independent Coca-Cola bottlers.
The company is the sole licensed bottler for products of Coca-Cola in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden. It operates with a local focus and has 17 manufacturing sites across Europe, where the company manufactures nearly 90% of its products in the markets in which they are consumed.
The company reported solid first-quarter earnings, though volumes dropped some. The recent merger with Coca-Cola Erfrischungsgetränke in Germany and Coca-Cola Iberian Partners, which serves Spain and Portugal, was a big catalyst. Shareholders approved the merger, and the S&P 500 removed the stock from the index as a result of the merger. The stock was crushed as index funds were forced to sell, giving investors an outstanding entry point.
Coca-Cola European Partners investors receive a 3% dividend. The Merrill Lynch price target for the stock is $44.50, and the Thomson/First Call consensus target is higher at $48.58. The shares closed on Wednesday at $39.95.