2 growth and dividend bargains that could help you retire a millionaire

Royston Wild looks at two shares expected to deliver exceptional earnings and dividend growth now and in the future.

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An exceptional trading update provided shares in Morgan Sindall Group (LSE: MGNS) with an extra shot of juice in Wednesday business.

The share was last dealing 4% higher on the day after advising: “Trading in the second half of the year has continued to be strong” and, as a result, “the group is on track to deliver a full year performance slightly ahead of its previous expectations.” The firm said that margin improvements at its Construction & Infrastructure and Fit Out divisions were responsible for the upgrades.

In other good news, it advised of a further improvement in its committed order book. This stood at £3.8bn at the close of September, up 5% from the start of the year, and up 1% from three months earlier. Its regeneration & development pipeline was up 2% from the first half, it added, at £3.3bn.

And to round things off, the construction and regeneration giant said that it expected average daily net cash for the full year to come in above £100m, smashing its prior forecasts of not less than £75m.

A growth and income superstar

Yet despite its strong trading momentum Morgan Sindall remains undervalued by the market right now.

Earnings at the London business have been growing by strong double-digit percentages in recent years, and a further impressive advance, this time by 29%, is predicted by City brokers for 2017. And Morgan Sindall is anticipated to follow this with an extra 8% advance next year.

But despite its relentless share price ascent — today’s release sent Morgan Sindall to fresh record tops above £15 and means it has now doubled in value since the start of 2017 — a forward P/E ratio of 13.8 times, and a corresponding PEG multiple of 0.5, shows that the construction colossus remains brilliantly cheap.

And offering up another reason to invest, dividends are expected to keep rolling higher at a blistering rate too. Last year’s 35p per share payment is anticipated to rise to 43p in 2017, and again to 46.9p in 2018. Yields for these years clock in at a healthy 2.9% and 3.1% respectively.

I reckon Morgan Sindall is a share that could make you brilliantly rich in the years ahead.

Another scintillating share

Macfarlane Group (LSE: MACF) is another terrific all-rounder that could deliver stunning shareholder returns now and in the future.

The Glasgow business, which has also taken flight in recent weeks and struck its own record tops above 73p on Wednesday, saw turnover rocket 10% in January-July to £89.3m and pre-tax profit 27% to £2.5m. And it advised the seasonal uplift in the fast-growing e-commerce marketplace should underpin further progress in the second half of the year.

Reflecting these favourable conditions, City brokers expect the packaging specialist to record earnings jumps of 31% and 13% in 2017 and 2018 respectively. And as a result the business also emerges as a brilliant value play, sporting a prospective P/E multiple of 12.1 times and a sub-1 PEG reading of 0.4.

Meanwhile Macfarlane’s progressive dividend policy is expected to dish out rewards of 2.1p per share this year and 2.3p in 2018, meaning that yields for these years stand at a chunky 2.8% and 3.1%.

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 no position in any of the shares mentioned. 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.

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