LONDON -- Some investors prioritize capital growth through a rising share price, while some prioritize a high income from a big dividend yield. And growth-and-income shares offer investors a bit of both.
British American Tobacco (LSE:BATS) (NYSE:BTI), Reed Elsevier (LSE:REL) (NYSE:RELX), and AMEC (LSE:AMEC) 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.
British American Tobacco
British American Tobacco, the world's most international tobacco company, has flown safely through the past five years of economic turbulence. Growth has been driven by the group's four key brands -- Dunhill, Kent, Lucky Strike, and Pall Mall -- and by markets outside the struggling Southern Europe region.
Last week, in its results for 2012, BAT announced a 7% increase in both earnings per share and dividend. Analysts expect EPS to rise by an average 9% a year for each of the next two years, with dividend growth tracking earnings.
At a recent share price of 3,508 pence, BAT is trading on 16 times forecast 2013 earnings -- a little above the Footsie average -- but with a higher-than-average dividend yield of 4.2%.
Reed Elsevier, the international publisher of scientific, academic and business information, reported a solid set of results for 2012 last week and gave an upbeat outlook for 2013. Last year, like BAT, Reed Elsevier increased both its EPS and dividend by 7%. Analysts are forecasting EPS growth of 5% for 2013, rising to 8% in 2014, with a 6% uplift in the dividend each year.
At a recent share price of 721 pence, Reed Elsevier is trading on less than 14 times forecast 2013 earnings and offers a dividend yield of 3.5% -- both a little more attractive than the FTSE 100 average.
This British multinational consultancy, engineering, and project-management group is focused on the natural-resources and infrastructure markets. Despite the tough economic environment of the past five years the company has been growing strongly.
Last month, AMEC announced a 14% increase in EPS for 2012 and hiked its dividend by 20% "as a mark of our continued confidence in the outlook." Analysts are expecting high-single-digit earnings and dividend growth for 2013, with a return to double-digit growth in 2014.
At a recent share price of 1,037 pence, AMEC is trading on less than 12 times forecast 2013 earnings and offers a dividend yield of 3.7% -- both attractive relative to the market average.
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