St. James's Place plc: a FTSE 100 stock for growth and dividend investors

The combination of capital growth and dividends may just be the Holy Grail of investing. Share price appreciation combined with a steady stream of dividends can really propel an investor's portfolio higher over the long term. Today, I'm looking at two FTSE 100 stocks that I believe have the potential to provide this powerful combination.

St. James's Place

Wealth manager St. James's Place(LSE: STJ) is a leader in its field. The firm offers bespoke face-to-face advice to individuals, trustees and businesses, through a network of around 3,700 qualified advisers. At a time when high-quality customer service seems to be disappearing from society, St James's Place, with its focus on longlasting partner/client relationships, is thriving.

A trading update released today revealed strong momentum across the business. For the 12 months ended 31 December, gross inflows were up 29%, while group funds under management rose 20%. The company enjoyed a 96% retention rate of client funds - an indication that it's clearly offering an excellent service. Chief Executive Andrew Croft stated that the firm continues to see "growing demand for advice."

One thing that really appeals to me about STJ is the stock's dividend growth. While the yield isn't super high at 3.5% (FY2017 estimate), the growth of the payout in recent years has been amazing. Indeed, between 2011 and 2016, the wealth manager hiked its dividend from 8p per share to 33p per share, growth of 33% per year on an annualised basis. You won't find many other FTSE 100 companies lifting their payout at that rate. Analysts expect growth of a further 30% for the year just gone.

While the stock's valuation is not cheap on a P/E of 25.2 times FY2018's earnings, the share price is clearly trending upwards. If St. James's Place can keep increasing its dividend at a strong rate, the stock could continue to climb higher over the long term, in my view.

ITV

If STJ's valuation looks too expensive for you, take a look at ITV(LSE: ITV) right now. The broadcaster has seen its share price fall over 30% in the last two years, and now trades on a forward P/E of just 10.8. In my opinion, that's a bargain valuation.

The share price has suffered because companies have cut their advertising budgets in recent years. As a business that generates a significant proportion of its revenues from advertising, the broadcaster has suffered.

However, what many investors fail to realise is that ITV is not just a one-trick pony. The business is considerably more diversified than it used to be and ITV now generates over 50% of its revenues from sources other than spot advertising. And these areas of the business are growing. A trading update in November revealed that revenue at ITV studios was up 9% for the first nine months of the year, while online, pay and interactive revenues also performed well, with 8% growth. This leads me to believe that the stock's current valuation is simply too low.

ITV's dividend prospects also look compelling. An estimated payout of 7.8p per share for FY2017 puts the current yield at 4.6%. Buy the shares now and you'll get paid to wait for a turnaround in sentiment towards the sector. That's how I'm playing the stock right now.

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Edward Sheldon owns shares in ITV. The Motley Fool UK has recommended ITV. 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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