2 attractive growth and dividend stars for your ISA

Since Saga (SAGA) first arrived on the stock market with an Initial Public Offering (IPO) during May 2014 at 185p, its share price has gone virtually nowhere. The FTSE 250 company trades around 206p today, after jiggling around a bit for three years but making little headway.

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Trading well

Saga -- the business -- is doing rather well, though, as today's full-year results attest. Basic earnings per share pushed up 6% compared to a year ago, net debt shrivelled by more than 15% and the directors underlined their confidence in the firm's prospects, and rewarded investors, by hiking the dividend by just over 18%.

It's well known that Saga targets the 50-and-over demographic and, on the surface, that seems like a good idea, because many greying individuals can be 'minted', to use the vernacular. Around 89% of pre-tax profit came from insurance services, with the rest coming from tour operations and cruises. On top of that, Saga is pushing into new territory with services in personal finance, healthcare, retirement villages and media. But those emerging businesses are loss-making for the time being.

Chief executive Lance Batchelor is upbeat, saying, "Our confidence in continuing to deliver a consistent financial performance in 2017 is strong. We have started the financial year well, and I look ahead with a great deal of optimism for the business."

What's up?

When Saga first came to the market, my first thought was that the firm's operations look cyclical, which means the firm may depend on a buoyant economy to flourish. As such, valuation-compression could be holding the shares back, as the market tries to discount for a future economic downturn. Nevertheless, Saga's dividend record since IPO is impressive, rising 107% over two years, and the business is growing. If a downturn proves to be years away, Saga -- the stock -- could do well from here.

Meanwhile, pharmaceutical products firm Alliance Pharma's (LSE: APH) full-year results are dominated by the first full accounting period that includes the firm's major acquisition of the healthcare products business from Sinclair Pharma plc. The acquisition doubled the size of the company in terms of revenue and profits, and almost doubled the size of the share count when the company issued new shares to raise the money for the purchase.

Benefits for shareholders

There's evidence in the results that benefits are beginning to filter through for investors, with diluted earnings per share lifting 11% compared to a year ago. The directors expressed their confidence by pushing up the full-year dividend 10%.

Chairman Andrew Smith reckons Alliance Pharma now trades in more than 100 countries and the firm is focused on its international growth opportunities with the products Kelo-cote, MacuShield and Diclectin.

Today's 48.25p share price throws up a forward price-to-earnings (P/E) ratio of 10.5 for 2018, which could prove to be low if international growth takes off. While we wait, there's a forward dividend yielding around 3% to collect.

An opportunity

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.