3 FTSE 100 Growth-and-Income Shares

LONDON -- Some investors prioritize capital growth through a rising share price, while some prioritize income growth from a rising dividend. But some shares -- growth-and-income shares -- offer investors a bit of both.

Imperial Tobacco (LSE: IMT  ) (NASDAQOTH: ITYBY  ) , British Sky Broadcasting (LSE: SKY  ) , and United Utilities (LSE: UU  ) (NASDAQOTH: UUGRY  ) are three companies from the U.K.'s elite FTSE 100 index that have grown both their earnings and dividends faster than inflation -- and are forecast to continue doing so.

Imperial Tobacco
Imperial Tobacco reported decent growth from emerging economies within its latest interim results. However, this was insufficient to offset challenging conditions in some of the company's other markets, including the EU. The group's first-half earnings per share declined 3.1%, or 1.6% at constant exchange rates.

Nevertheless, Imperial is looking forward to a stronger second half. Management expects full-year EPS to be toward the lower end of its 4% to 8% annual growth earnings model (before the beneficial impact of share buybacks). The board showed its confidence by lifting the interim dividend 11%, in line with its intention to grow the payout by 10% a year over the medium term.

At a share price of 2,402 pence, Imperial is on an undemanding forward price-to-earnings ratio of 11 and offers a prospective dividend income of 5%.

British Sky Broadcasting
At 786 pence, BSkyB's shares are about 14% off their 900 pence high in March. The decline is due in no small part to an announcement from BT Group last month that it will be offering free sports channels to any BT broadband customer.

BSkyB has been growing its earnings at more than 20% a year for the last few years. Analysts expect this to moderate to 15% for the year ending June 2013 and to a mid-single-digit for the next year -- with the dividend broadly tracking the EPS growth.

BSkyB is on a 12-month forward P/E of about 13 and a dividend yield of 4%. The rating is attractive relative to both the wider market and the company's own historical P/E and yield levels.

United Utilities
United Utilities holds a license to provide water and sewage services in the north west of England. Over the last decade the company has sold its telecom and electricity businesses and assets to focus on the regulated water industry.

Regulated companies are known more for income than growth, but United Utilities increased EPS by 11% last year, and analysts are expecting a rise of a similar order for the year ending March 2014. The dividend has been growing at 7% a year, and the board has said it intends to "continue with our dividend policy of targeting 2% per annum growth above the rate of RPI inflation through to at least 2015."

Utilities have been popular with investors hungry for yield in the prevailing low-interest rate environment. This, together with takeover activity in the sector, has driven the ratings of water companies higher. At a current share price of 752 pence, United Utilities is trading on a forecast P/E of more than 17. There's a prospective dividend yield of 4.8%, which is above the FTSE 100 average but on the low side of United Utilities' own historical level.

Growth and income
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