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Can these 2 FTSE 100 growth and dividend stocks pep up your portfolio?

Want to hear about a FTSE 100 stock raising its dividend by 75% over five years? If the latest 2019 forecasts prove accurate, that’s what you’ll get from RELX (LSE: REL), whose earnings growth has been on a bit of a tear in recent years.

The dividend would only yield a modest 2.6%, but given the choice, I’d always take a strongly progressive dividend over a higher but static one.

Full-year forecasts look a step closer to reality now, after the information and analytics specialist, formerly known as Reed Elsevier, reported a 4% rise in underlying revenue for the nine months to 30 September, with “some improvement in underlying metrics compared to the first half across all four business areas.

Excess cash

The firm has splashed out £378m on 12 asset acquisitions during the period, and had sold seven for a total of £62m. RELX is progressing with its share buyback too, having now completed £550m of the planned £600m, and intends to achieve its full target by the end of the year.

The company clearly sees its own shares as undervalued, but on a forward P/E significantly ahead of the FTSE 100 average at almost 19, I can’t help wondering if a special dividend might have been a better value route for returning surplus cash to shareholders.

Still, the share price has climbed 20% over the past 12 months, compared to the index’s 5.2%, so shareholders should be happy. The price has dipped 10% since its peak in September, and that makes me think we could be looking at a long-term buying opportunity.

Bigger valuation

RELX’s P/E rating looks positively mundane compared to Aveva (LSE: AVV), whose shares are on a forward multiple of 37, based on 2019 forecasts. And Aveva’s dividend, even though it will have risen 56% in five years and is similarly around twice covered by earnings, is only yielding around 1.2%. So why the big valuation, and is it sustainable?

The Aveva share price has been soaring since early 2018 while, prior to that, it had been keeping mostly ahead of the FTSE 100. The surge has now pushed it to a 162% gain over five years, while the index is up 11%.

The company is in the software business, serving the plant, power and marine industries, and its share price did take a brief dip in September, possibly due to a warning of weaker market conditions from Micro Focus. But the slip quickly recovered, and Thursday’s first-half trading update showed no signs of any trouble.

Steady growth

Aveva reported “low double-digit revenue growth on a proforma constant currency basis in the first half,” based on a combination of strong sales in the first quarter, the renewal of one large contract, and revenue growth from other multi-year contracts.

Even after the acquisition of MaxGrip for £21.6m, and after paying £46.8m in dividends, the firm was still left with net cash of £58.6m, so the balance sheet is looking pretty strong to me.

So would I buy the shares? At their current valuation, no. I’m seeing a very healthy company, but whose shares are trading on a significant growth premium with little downside safety. If we get the slightest wobble in earnings growth, I’d expect a downwards price correction.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Micro Focus and RELX. 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.