The High-Yield Stock Beating Nvidia...

NVIDIA Corporation ($NVDA) is a high-tech company leading the AI race. Its CEO is a household name, its chips power the world’s data centers, and its stock is a core holding in nearly every major ETF.

Year-to-date, NVIDIA is up an impressive 33.20%.

Embotelladora Andina S.A. ($AKO.B) is a low-tech company that bottles soda, energy drinks, and milk in a handful of South American countries. Few investors recognize the name, it’s seldom included in ETFs, and its CEO has just 1,000 LinkedIn followers.

Yet the stock is up 43.26% year-to-date — and that’s excluding dividends.

Embotelladora Andina is a Chilian company that bottles and distributes Coca-Cola products, Monster Energy drinks, and milk. The firm operates in Chile, major Brazilian cities, parts of Argentina, and the entire country of Paraguay.

I’ve always been fond of this business due to its high-yield as well as its exposure to Paraguay.

Unlike Argentina or Brazil, which regularly suffer hyper-inflation and other economic problems, the Paraguayan Guarani is one of the most stable currencies in South America. Paraguay also has a population of around 7 million people. So, owning Embotelladora Andina stock gives investors exposure to a “beverage monopoly” in a country with a population that’s comparable to U.S. states like Indiana and Maryland.

Being an obscure Latin American stock, Embotelladora Andina is relatively cheap.

Despite the firm’s massive gains, this stock still trades at a price to earnings ratio of 15.21 while offering a 4.56% starting yield.

Embotelladora Andina has paid dividends every year since 1997. And the company dates all the way back to 1946. Due to the boring nature of this business, plus its association which the much larger and more powerful Coca-Cola brand, this is a fairly stable investment.

When Wall Street panics over hyper-inflation in Argentina or socialism in Chile, this stock dips into extreme value territory.

For example, in October, 2022, Embotelladora Andina sunk to less than $11 per share due to fears about Chile’s self-described "moderate socialist" president. Since then, shares are up over 156%.

In October, 2023, another sell-off, this time caused by Argentina’s elections, pushed the stock under $12 per share.

An investor who bought the 2023 dip would now be up over 125%.

In both situations, the firm continued paying dividends.

An investor who bought the 2023 dip would have experienced a 9% yield on cost the following year. And an investor who bought the 2022 dip would have enjoyed a 12% yield on cost over the next 12 months.

Embotelladora Andina is listed on the New York Stock Exchange and is fairly liquid with an average trading volume of 25,227 shares per day.

In terms of downsides, besides the drawdowns whenever Wall Street panics, this is a Chilean stock and Chile subjects non-Chilean investors a 35% dividend withholding tax.

Things are going well in Latin America right now, and Embotelladora Andina is trading near its multiyear high.

It’s probably not the best time to buy this stock, but…

Coca-Cola products, which include staples like water and juice, never go out of style. And the next time Wall Street panics over Latin America, Embotelladora Andina could be a great contrarian play with the potential to offer a double-digit starting yield and long-term capital appreciation.

Keep this one on your watchlist.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.