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

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »

Investing Articles

2 FTSE dividend shares yielding more than 6% with P/Es of less than 9!

Harvey Jones picks out two brilliant FTSE 100 dividend shares that yield more than 6% but are selling at strangely…

Read more »

Investing Articles

Up 105% in a year! Is this rocketing FTSE bank the perfect pick for my Stocks and Shares ISA?

Harvey Jones is drawing up a shortlist of stocks to purchase inside his Stocks and Shares ISA allowance. This FTSE…

Read more »