2 FTSE 100 growth and income stocks that could make you rich

Royston Wild runs the rule over two of the FTSE 100’s (INDEXFTSE: UKX) hottest ‘all rounders’.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investor demand for Burberry Group (LSE: BRBY) has marched higher again in recent weeks, and it is not difficult to see why.

The London-based luxury fashion house, which has seen its share price jump 23% during the past six months, has been supported by news that sales continue to pick up in its global marketplaces. Its latest trading numbers in July smashed past even the most optimistic of broker expectations.

Burberry reported a 13% sales improvement during April-June, or 4% on a like-for-like basis, helped by a stream of well-received product launches. The business saw trade continue to improve in Asia, with Mainland China reporting “mid-teens percentage growth” and performance also picking up in Hong Kong. And in its aggregated EMEIA (Europe, Middle East, India and Africa) territory, sales rose by high single-digit percentages.

Exceptional revenues growth is not the only reason why share pickers are piling back into the company, however. Its cost control strategy to create a more efficient earnings-generating machine in the years ahead also receiving plenty of plaudits. The firm remains on course to achieve cost savings of £50m this year alone, it says.

Pricey but pristine

The thing I particularly love about Burberry is that the fashion favourite gives plenty for both growth and dividend investors to shout about.

With the extreme sales pressures in its far-flung Asian markets gradually easing, the bottom-line recovery that kicked off last year still has plenty left in the tank, at least according to City analysts. Earnings rises of 2% and 12% are forecast for the years to March 2018 and 2019, respectively.

And these perky profits predictions are expected to keep dividends growing at a splendid rate, too. The 38.9p per share forked out in 2016 is expected to rise to 40.9p in the current year, resulting in a not-too-shoddy 2.1% yield. And the 44.9p payout pencilled in for fiscal 2019 yields a meaty 2.4%.

While it may not fit the bill for value chasers – the Footsie beauty carries a forward P/E multiple of 23.9 times – I reckon the evergreen appeal of Burberry’s brand with fashion lovers across the globe makes it worthy of a premium rating.

Packaging star

Paper powerhouse Mondi (LSE: MNDI) is another of the FTSE 100’s terrific ‘all rounders’, with City analysts predicting chunky earnings and dividend growth here, too.

Earnings rises of 9% and 8% are forecast for 2017 and 2018, and these figures make the company exceptional value (it carries a forward P/E ratio of 14.1 times). Meanwhile, anticipated dividends of 64.5 and 67 euro cents per share for this year and next create large yields of 3.1% and 3.2%.

Now stock pickers, unlike over at Burberry, have fallen a little out of love with Mondi following its warning earlier this month that profits would fall “modestly below market expectations” as a result of rising costs in the third quarter.

But I believe the packaging giant’s long-term investment case remains a compelling one given the supply pressures in its key markets, and that investors should capitalise on recent price weakness. I fully expect Mondi’s share price to resume its upward march sooner rather than later.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

1 penny stock with the potential to change the way the world works forever!

Sumayya Mansoor breaks down this potentially exciting penny stock and explains how it could impact food consumption.

Read more »

Investing Articles

2 FTSE 250 stocks to consider buying for powerful passive income

Our writer explains why investors should be looking at these two FTSE 250 picks for juicy dividends and growth.

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Growth Shares

This forgotten FTSE 100 stock is up 25% in a year

Jon Smith outlines one FTSE 100 stock that doubled in value back in 2020 but that has since fallen out…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

2 dividend shares I wouldn’t touch with a bargepole in today’s stock market

The stock market is full of fantastic dividend shares that can deliver rising passive income over time. But I don't…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

Use £20K to earn a £2K annual second income within 2 years? Here’s how!

Christopher Ruane outlines how he'd target a second income of several thousand pounds annually by investing in a Stocks and…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Here’s what a FTSE 100 exit could mean for the Shell share price

As the oil major suggests quitting London for New York, Charlie Carman considers what impact such a move could have…

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

Shell hints at UK exit: will the BP share price take a hit?

I’m checking the pulse of the BP share price after UK markets reeled recently at the mere thought of FTSE…

Read more »

Investing Articles

Why I’m confident Tesco shares can provide a reliable income for investors

This FTSE 100 stalwart generated £2bn of surplus cash last year. Roland Head thinks Tesco shares look like a solid…

Read more »