Hunting For Hot Growth AND Income Plays? Check Out easyJet plc, Vodafone Group plc And Imperial Tobacco Group PLC

Today I am looking at three FTSE giants waiting to line the pockets of savvy investors.


Passenger demand at easyJet (LSE: EZJ) continues to ratchet higher as improving economic conditions on the continent fuels the wanderlust of local travellers. Latest traffic data from the Luton firm revealed the number of passengers it carried in July advanced 9.4% year-on-year, to more than 7 million, and that seat sales continue to edge higher — last month’s figure was a vast improvement from the 6.1% rise punched in the previous 12 months.

The budget carrier is not content to rest on its laurels, however, and is expanding the number of routes, as well as airports from which it operates, in order to meet growing traveller demand. With easyJet also benefitting from falling fuel costs the City has forecast earnings growth of 13% and 10% for the years concluding September 2015 and 2016 correspondingly.

Such figures leave the airline dealing on very attractive P/E ratios of 13.2 times for 2015 and 11.9 times for next year — any reading below 15 times is generally regarded excellent value. And easyJet’s strong earnings profile is expected to keep dividends flowing higher, with estimated payouts of 52p per share this year and 57.8p in 2016 providing handy yields of 3.1% and 3.4%.

Vodafone Group

Supported by its vast Project Spring organic investment scheme, I fully expect earnings at Vodafone (LSE: VOD) to enjoy a brilliant bounce in the years ahead. The business’ continental operations have experienced extreme stress in recent times thanks to the fallout of the 2008/2009 crisis on Europeans’ spending power; an increasingly-competitive market; and rising regulatory problems.

But with Vodafone chucking massive sums to improve its data and voice capabilities, not to mention embarking on massive acquisitions like those of multi-services providers Kabel Deutschland and Ono, the London firm’s revenues performance has received a huge boot in the right direction. And Vodafone is also splashing the cash in emerging markets to cotton onto rising personal income levels and accelerating mobile data demand.

As such, the number crunchers expect Vodafone to experience a 5% earnings dip in the period ending March 2016 — a vast improvement from the 28% slide experienced last year — before recording a 21% leap in 2017. Although P/E multiples for these years ring in at an elevated 47.4 times and 38.4 times correspondingly, anticipated dividends of 11.5p per share for 2016 and 11.6p for 2017 more than compensate for this, producing monster yields of 4.7% and 4.8%.

Imperial Tobacco Group

I believe cigarette manufacturer Imperial Tobacco (LSE: IMT) is a terrific way to gain access to lucrative earnings and dividend growth. The company’s decision to double-down on critical labels like Davidoff and West is clearly paying off handsomely, and underlying volumes of these Growth Brands rose 12% during October-March, it reported in June. Meanwhile, Imperial Tobacco’s restructuring plans are also clicking through the gears, and the firm remains of course to reduce costs by £300m a year from September 2018.

With Imperial Tobacco’s sprawling global presence giving it access to increasingly-rich emerging regions, and recent acquisitions in North America also boosting revenues from this massive market, the City expects earnings to tick higher again following last year’s rare 3% blip. A 2% rise is forecast for the year concluding September 2015, and a 12% bounce is predicted for the following period.

Consequently the tobacco play deals on very respectable P/E multiples of 16.1 times for this year and 14.1 times for 2016. On top of this, Imperial Tobacco also sports market-smacking yields through to the close of next year — a reading of 4.2% for this year rises to 4.6% for 2016 thanks to projected dividends of 141.7p and 155.6p per share.

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Royston Wild owns shares of Imperial Tobacco Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.