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Have £5,000 to invest? I’d buy these 2 FTSE 100 growth stocks

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Whether you are a seasoned investor or a stock market beginner, it can be hard to know where to make your next investment. Fluctuating economic conditions and geopolitical uncertainty mean that there is always a threat of volatility within the stock market.

However, the market has proved resilient despite tough conditions in recent years and, in my opinion, companies in the FTSE 100 represent a sound investment for portfolio growth.

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While some investors prefer to have the relative reliability of companies that provide a consistent and incremental dividend yield, this may not convert into the best overall return for your money.

Two names within the FTSE 100 which I believe to be long-term growth stocks are Legal & General Group (LSE:LGEN) and Pearson (LSE:PSON).

Long-term growth

Savings and insurance group Legal & General saw its operating profits increase 10% in the 2018 financial year, with earnings per share up 7%.

After seeing its share price decline at the back end of 2018 alongside many of its FTSE 100 companions, the stock is now up more than 17% since the beginning of 2019. Over the last five years, the pension manager has shown returns of 13.7% on average per annum, including dividends.

And speaking of dividends, Legal & General’s payout has increased significantly in recent years, with the yield currently standing at just over 6% and the company paying out 16.4p per share in 2018.

As Edward Sheldon has pointed out, the 15% growth rate in its dividend payments may perhaps be unsustainable, but even with merely ‘solid’ growth prospects, I believe it to be an attractive buy.

Pearson to bounce back?

Education group Pearson has seen its share price fall more than 10% in the last 12 months, but a solid start to its financial year suggests it may be starting to turn its fortunes around.

Pearson indicated in its first-quarter statement in April that underlying revenue grew by 2%, reiterating its full-year guidance that operating profits are to come in somewhere between £590m and £640m

With a price-to-earnings ratio of 11.3, I see Pearson’s current share price of 810p as a little undervalued and if it can keep that first-quarter momentum going, the growth potential is there.

While a series of profit warnings between 2015 and 2017 dented its stock market performance, Pearson has invested heavily in its educational technology offering and endeavoured to cut costs in many of its struggling North American businesses.

The latter comes as part of the education specialist’s restructuring efforts, which have coincided with limited dividend payouts, but the potential increase in its dividend in the coming years could boost returns. With a current dividend yield of just 2.3%, if Pearson can continue its strong performance for the remainder of the year, I’d expect that to rise.

Much depends on how the company’s technological innovation in the education sphere can grow its operations and not be significantly curtailed by its underperforming US business, but for now I reckon there is enough growth potential to buy Pearson shares.

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Conor Coyle has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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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