2 FTSE 100 growth and dividend stocks you can’t afford to miss

Edward Sheldon profiles two FTSE 100 (INDEXFTSE: UKX) companies that fly under the radar of many investors.

| 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.

The FTSE 100 index is stacked full of household names such as Royal Dutch Shell, HSBC Holdings and Lloyds Banking Group. However, at the same time, the index also contains a number of less well known, under-the-radar stocks. Today, I’m looking at two such FTSE 100 stocks and, in my view, both have the potential for capital growth and dividends.

Consistently profitable

Bunzl (LSE: BNZL) describes itself as an ‘international distribution and outsourcing group’. The £7.6m market-cap company specialises in providing businesses with essentials such as cleaning products, food packaging and safety consumables. Perhaps not the most exciting business model, but one that has been consistently profitable in the past. 

Indeed, with the help of an active acquisition strategy — the company has completed over 130 acquisitions since 2004 — revenue and profits have charged higher in recent years. Between 2011 and 2016, the company’s top line increased from £5,110m to £7,429m, with operating profit rising from £279m to £410m. City analysts expect revenue growth of a further 15% this year. 

This morning’s Q3 trading update shows signs of further progress. Revenue increased 11% in constant currency, through a combination of both organic growth and acquisitions, and the company stated that it expects to make further acquisitions over the coming months. 

One key appeal of Bunzl is the company’s dividend. While the prospective yield of 2% may not be the highest yield in the FTSE 100, the group has an outstanding growth track record, having increased its dividend for 24 consecutive years, at a compound annual growth rate (CAGR) of over 10%. Dividend growth like that can really boost long-term investment returns. 

Bunzl is not the cheapest stock in the FTSE 100 – on a forward P/E ratio of 19.7. However, I believe the shares can continue to move higher over the long term if the company keeps growing through acquisitions. For investors seeking both capital gains and income, I believe Bunzl is worth a closer look. 

Under-the-radar growth

Also offering under-the-radar growth and dividend appeal, in my opinion, is £5.6m market-cap Informa (LSE: INF).

The FTSE 100 company provides a broad array of products and services based on content, intelligence and connections to specialist communities worldwide. These include academic books and journals, data-driven intelligence publications and services, exhibitions, conferences and learning platforms.

Revenue at Informa has risen at a slow-but-steady rate in recetn years, rising from £1,130m in FY2013 to £1,346m last year. However, the company’s top line is forecast to fire almost 30% higher this year, due to the transformational £1.2bn acquisition last year of US rival Penton. 

Informa shares are up around 85% over a five-year investment time horizon, yet I believe there may be more gains to come for patient, long-term investors. Trading on a undemanding forward P/E ratio of 14.6, and sporting a prospective dividend yield of just under 3%, Informa shares look to offer value, in my opinion. 

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.

Edward Sheldon owns shares in Royal Dutch Shell. The Motley Fool UK has recommended HSBC Holdings, Lloyds Banking Group, and Royal Dutch Shell B. 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »