Legal & General isn't the only Footsie dividend-growth stock I'd buy today

William Hill(LSE: WMH) has been in the news for the wrong reasons lately, after being fined £6.2m by the Gambling Commission. It seems that, over a period of nearly two years, the company failed to spot evidence of problem gambling and potential money-laundering -- including the depositing of suspiciously large amounts of money.

Then Friday's full-year results included a pre-tax loss for the year of £74.6m and a loss per share of 9.7p.

But things aren't as bad as that sounds, as the damage was due largely to a hit of £238m from a writedown in the value of the company's Australian business due to regulatory and tax changes. That business was acquired in 2013, and is now under a strategic review which should conclude by the middle of the year.

Excluding one-off items, William Hill enjoyed an adjusted pre-tax profit of £255m, up 19% from 2016's £214m, and an encouraging 24% boost in EPS to 27.6p. The full-year dividend was lifted by 6% to 13.2p, to yield 4%.

Strong UK growth

The company saw market share growth across its UK businesses, with online gaming lifted by 13% in an area of the industry that is heavily competitive.

Despite this strong underlying year, forecasts suggest a slight softening of earnings over the next two years. But I really do see the gambling industry, and William Hill in particular, as offering long-term growth potential. But expect some short-term volatility as global regulatory issues chop and change.

With well-covered dividend yields from strong cash flow, I see healthy future income. On forward P/E multiples of around 12, William Hill shares look like a buy to me.

Excellent track record

I've long considered Legal & General Group(LSE: LGEN) as a top choice for growth and income potential, but that must be tempered by the likelihood of cyclical volatility in insurance sector dividends.

The company was hit by the financial crisis and had to cut the cash, but I've been looking back over its 15-year record, and I'm very impressed.

From 2003 onwards the dividend was growing steadily, but then came the crunch and we saw it slashed by around 50% between 2007 and 2009. But since then it's been steadily climbing again, and you might be surprised by the overall result.

If expectations of 15.3p per share for 2017 come good, investors will have earned a total of 113p in dividends in 15 years. That's on shares which would have cost you 73p this time in 2003, so your return from dividends would amount to 155%.

How much today?

As I write, the shares have reached 260p, so that's an additional gain of 356%.

In total, £1,000 invested in Legal & General in February 2003 would now be worth £5,110 -- and if you'd reinvested your dividends in more shares, it would be significantly more.

And looking back further, Legal & General shares have soared by 700% in a little under 30 years since Summer 1988 (with dividends on top), while the FTSE 100 is up only 300%.

Buying shares in quality companies and holding them for the long term, while ignoring short-term ups and downs, really does pay off.

Full-year results for 2017 are due on 7 March, and they should be good after the company told us it's "on track for a record year in 2017." On a P/E of around 10 and with forecast dividend yields set to beat 6%, Legal & General is a buy in my book.

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Alan Oscroft has no position in any of the 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.

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