Dividend reinvestment plans have gained in popularity among investors. The uncertain stock and commodity market have led investors to seek investment in companies offering competitive yields and returns to shareholders. I have short listed three companies that offer the best dividend reinvestment plans. Importantly, aside from being shareholder friendly, these companies are in a position to provide returns from capital appreciation as well.

Coca-Cola Enterprises Inc. (CCE):

Coca-Cola Enterprise is in a good position to outperform the market in future. The company has recorded five years of continuous growth. Furthermore, since 2006, Coca-Cola’s dividends have increased by more than 100%. The enterprise has a strong product mix and portfolio which will enable the company to achieve its long term objectives. The company’s management foresees long term revenue growth of 4%-6% and operating income growth of 6%-8%. The company also targets to improve its ROIC by more than 20 basis points per year in the long run.

Around the price level of $26, CCE trades at a discounted price to earnings ratio of 13.5 times, while its peers Danone (DANOY.PK) and Kraft Foods Inc.(KFT) trade at a price to earnings ratio of 15 and 20, respectively. It also trades at a discounted price to earnings growth ratio (estimated 5 years) of 1.08. As per the latest quarterly report, CCE recorded revenue growth of 39.1%, which is higher than DANOY.PK’s and KFT’s growth of 16.3% and 13.3%, respectively. CCE’s gross and operating margins hover around 36.73% and 13.3%, respectively, while its trailing twelve months dividend yield stands at 2.1%. To continue reading, click here