At first glance, this might not look like the market’s leading income or growth stock, but if you look at the company’s performance over the past decade, it quickly becomes apparent that this business is built for the long term — making it a good pick for beginners.

Indeed, over the past 10 years, the company’s earnings per share and dividend per share have grown at a steady rate of around 10% per annum, while book value per share — a measure of business wealth — has increased at an average rate of 14% per annum over the past six years.

Today the company reported that during 2017 it managed to achieve a similar rate of growth. Underlying profit before tax grew by 10% thanks to revenue growth of 9%, and statutory profit before tax increased 9% allowing management to increase the total dividend per share by 10%, the 23rd consecutive year of dividend growth. 

Innovation is key 

James Fisher’s management attributes the group’s steady double-digit growth rate to its international presence, high-quality management and reputation. Long-term chairman Charles Rice will step down at the beginning of May. But he believes the firm’s “stable management team” and “continued commitment to a decentralised management structure which keeps decision-making close to our customers and markets” will ensure it continues to innovate and can grow for many years to come. In my view, this focus on innovation more than justifies the high valuation of 16.3 times forward earnings.

What’s more, for dividend investors there is also plenty to like as the payout is currently covered nearly three times by earnings per share, giving plenty of room for growth in the years ahead. The shares support a dividend yield of 2.2%.

Slow and steady 

Another stock that I believe should feature in any beginners’ portfolio is A.G. Barr (LSE: BAG). This is another business that initially looks expensive, but its record of expansion and well-established brands mean that it is well placed to continue to grow steadily for the foreseeable future. As my Foolish colleague G A Chester previously pointed out, the shares have returned over 14% p.a. for the past decade.

The shares currently trade at a forward P/E of 19.9 and support a dividend yield of only 2.5%. This payout is covered twice by earnings per share and has grown at a steady rate of between 5% and 10% over the past five years. There’s no reason why this rate of growth cannot continue as City analysts expect the company’s earnings per share to rise by 10% over the next two years. Further, over the past five years, it has been cleaning up its balance sheet and has virtually eliminated all of its debt, enabling it to announce a £30m share buyback at the beginning of last year. 

Compared to its current market value of £735m, a buyback of £30m is a meaningful return to investors. If management continues to reinvest excess free cash flow into buybacks and dividends, shareholders could be in line to receive healthy returns in the years ahead, indicating to me that this is a great investment for investors of all experiences.

The post 2 FTSE 250 growth and income stocks I’d buy for a starter portfolio appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AG Barr. 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.

What many investors don’t realise is that this company is one of the few companies in the world that has an extraordinary record of increasing its dividend for over seven decades. 

And today the company added to that record by announcing a 4% increase to its interim dividend alongside its half-year results. 

Upbeat trading 

For the 26 weeks to the end of September, the family-owned company reported a 4% increase in pre-tax profit to £23.8m and a 5% increase in adjusted earnings per share to 34.2p. What’s more, revenue expanded across all divisions as CEO Simon Emeny said that in the 33 weeks since 1 April 2017, like-for-like sales in its Managed Pubs have risen 3.7%, while like-for-like profit in its Tenanted Inns is up 2% and total beer and cider volumes in The Fuller’s Beer Company are up 1%.

These figures are highly impressive, especially when the rest of the pub industry is suffering from multiple headwinds such as the rising minimum wage and a squeeze on consumers’ incomes. Indeed, only yesterday peer Mitchells & Butlers announced that it was slashing its dividend after adjusted operating profit for the year to the end of September fell 3.1%, thanks in part to rising costs. 

Looking at today’s figures from Fuller’s, it would appear that the group is using its decades of experience as a pub operator to navigate today’s choppy trading environment exceptionally well, a testament to management and great news for shareholders. The firm’s outperformance should underpin continued dividend growth making this a great stock for long-term income seekers. 

At the time of writing, the shares support a dividend yield of 2% and this payout is covered three times by earnings per share, leaving plenty of room for manoeuvre. 

This is one dividend stock that you can buy and forget for the next few decades. 

Changing with the times 

James Fisher & Sons (LSE: FSJ) is another company that has proved itself over the past few decades. In fact, the business has been operating for over 170 years, so it has plenty of experience of working through both the good times and the bad. 

This has helped the firm navigate through the energy industry slump by expanding into renewables and this transition is paying off handsomely. According to a trading update issued by the firm today, revenue for the 10 months ended 31 October was 7% ahead of the comparable period last year, and the group remains on track to hit City expectations for the year. 

Unfortunately, it seems the market isn’t pleased with this update, as the shares are trading lower by 3% at the time of writing. However, while the market may have lost interest in the business, as a long-term buy, James Fisher looks highly attractive to me. 

Earnings per share are expected to hit 82.2p this year, a five-year high and up 46% from 2012. If the group can remain on this growth trajectory, and continue to re-invent itself, there’s no reason why James Fisher cannot help you make a million from investing. The shares trade at a P/E of 19.5 and yield 1.8%. 

The post These 2 ‘secret’ growth stocks could still make you brilliantly rich appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Rupert Hargreaves owns no share 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.