LONDON -- Some investors prioritize capital growth through a rising share price; some prioritize income growth from a rising dividend. But some shares -- growth-and-income shares -- offer investors a bit of both.
Petrofac (LSE:PFC), TUI Travel (LSE:TT), and Tate & Lyle (LSE:TATE) 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.
Petrofac is one of the world's leading oilfield service firms. The company has delivered strong earnings growth over the past five years, most recently a 17% increase in earnings per share for 2012. The dividend was also raised 17% for the year.
Last month, Petrofac reported there would be a longer delay than originally expected in recommencing operations at an Algerian site after a terrorist attack during January. The company said it now expects modest growth in profits for 2013.
City analysts are forecasting mid-single-digit EPS growth for the year -- only a little ahead of inflation -- but a return to growth in the high teens for 2014. Dividend growth is expected to follow EPS.
At a recent share price of 1,301 pence, Petrofac is trading at not much more than 10 times forecast earnings for 2013, with a dividend income of 3.4%.
Tour operator TUI Travel was in the red for the three years 2008-2010, but the company still managed to give shareholders a modest annual increase in their dividends.
Having weathered the recession, TUI has seen its profits bounce back, and the dividend has continued to grow. Last year, the company increased EPS by 9% and its dividend by 3.5%. Recently, the board raised the latest interim dividend by 10% and said it expects underlying profit growth of at least 10% for the year to September.
Analysts are currently forecasting EPS growth of 10% for both this year and next, with the dividend rising by the same magnitude. At a recent share price of 344 pence, TUI is trading on 12 times forecast 2013 earnings and offers a dividend yield of 3.8%.
Tate & Lyle
Sweeteners group Tate & Lyle has been growing nicely since Javed Ahmed took over as chief executive in 2009. The ex-Reckitt Benckiser man disposed of the group's sugar refining business, reducing exposure to volatile commodity prices and leaving Tate & Lyle as a steadier company.
Earnings and dividend growth last year were in the mid-single digits, modestly ahead of inflation. Analysts are forecasting similar growth for the year to March 2014, and then growth of around the 8% the following year.
At a recent share price of 810 pence, Tate is trading at 13.4 times current-year forecast earnings and offers a prospective dividend yield of 3.4%.
Growth and income
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G.A. Chester owns no shares mentioned in this article. The Motley Fool recommends Reckitt Benckiser. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.