Outpace inflation with growth-and-income shares Unilever plc (LON:ULVR), J Sainsbury plc (LON:SBRY) and Standard Chartered PLC (LON:STAN).
Some investors prioritise capital growth through a rising share price; some prioritise income growth from a rising dividend. But some shares -- growth-and-income shares -- offer investors a bit of both.
Unilever (LSE: ULVR) (NYSE: UL.US), J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) and Standard Chartered (LSE: STAN) are three companies from the UK's elite FTSE 100 index that have grown both their earnings and dividends faster than inflation, and are forecast to continue doing so.
The global consumer goods giant owns powerful brands in food, drinks, cleaning and personal care. The 2009 appointment of an outside chief executive for the first time in the company's history seems to be paying off. Paul Polman -- a Procter & Gamble and Nestle veteran -- has impressed in driving Unilever's sales and earnings upwards at a good clip over the last three years.
Unilever delivered earnings-per-share (EPS) growth of 10% for 2012 and increased its dividend by an ahead-of-inflation 4.4%. Analysts are expecting a similar growth performance for 2013, and the dividend to be covered 1.7 times by earnings.
At a recent share price of 2,792p, Unilever is trading on 19.5 times forecast earnings with a prospective yield of 3.2%. That's a pretty rich rating relative to the market, but there does seem to be above-average momentum in Unilever's business, notably from emerging markets where the company has a stronger presence than its rivals.
Sainsbury is another company with good momentum in its business. The supermarket has prospered compared with its faltering FTSE 100 rivals Tesco and William Morrison over the last year or so.
In a competitive environment, Sainsbury delivered EPS growth of 6% for the year ended March 2012. Analysts are expecting the same when the company announces its results for the year to March 2013 -- and the same again the following year. The dividend is expected to grow a little slower -- at around 4% a year -- with cover edging up from 1.7 to 1.8.
At a recent share price of 385p, Sainsbury is trading on 12.3 times forward earnings with a prospective income of 4.7% -- both at value levels relative to the Footsie average.
Standard Chartered's geographical positioning is unlike any of its UK banking rivals: the company earns 90% of its profits from the Asia-Pacific, Middle East and Africa regions. This exposure to higher growth economies has enabled the bank to deliver 10 successive years of record profits.
Standard Chartered provided its shareholders with double-digit EPS and dividend growth for 2012, and analysts are expecting more of the same for 2013. The forward numbers suggest the dividend will be covered a healthy 2.6 times by earnings.
At a recent share price of 1,630p, Standard Chartered is trading on just over 10 times forecast 2013 earnings and offers a prospective yield of 3.6%. As with Sainsbury, Standard Chartered's earnings rating and yield are both at value levels. For the supermarket, the value is tilted more towards yield; for the bank it is more towards earnings.
Growth and income
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> G A Chester does not own any shares mentioned in this article. The Motley Fool owns shares in Standard Chartered and Tesco, and has recommended shares in Unilever.