2 beautiful growth and dividend stocks I’d buy right now

Clearly not one to be outdone, Telford Homes (LSE: TEF) was the latest construction giant to underline the strength of the UK housing market in Thursday business.

Chief executive Jon Di-Stefano commented that “since we reported our final results on 31 May 2017 [we have] achieved further momentum in the build to rent sector and we are assessing a number of exciting new development opportunities to add to our £1.5bn development pipeline.”

Supported by what it describes as “the chronic need for new homes in London,” Di-Stefano affirmed that it expects pre-tax profits of at least £40m and £50m during the years to March 2018 and 2019.

Raising the roof

While the housebuilder alluded to the political and economic turbulence currently coursing through the UK, these pressures are not expected to curtail demand for its homes. Di-Stefano noted that “regardless of this uncertainty there remains a lack of supply of new homes relative to need in non-prime areas of London.

We believe this imbalance, coupled with our increased focus on build to rent, will continue to underpin the longer-term growth of Telford Homes,” he added.

The City certainly expects these factors to keep propelling the builder’s bottom line higher, the abacus bashers predicting earnings expansion of 27% in fiscal 2018. And a further 20% rise is expected in 2019.

These projections make the stock excellent value for money. For one, P/E ratios for this year and next ring in at 8.4 times and 7.1 times, below the widely-regarded bargain watermark of 10 times. And sub-1 PEG ratios, of 0.3 and 0.4 for 2018 and 2019 respectively, underline its cheapness relative to its growth potential.

The good news does not stop here either, the Square Mile’s boffins also predicting further healthy dividend growth at Telford Homes. Last year’s reward of 17.2p per share is anticipated to march to 15.7p in the present period, resulting in a vast 4.4% yield. And an estimated 18.9p dividend in 2019 drives the yield to a market-mashing 4.8%.

I reckon there’s plenty of incentive for stock seekers to pile into the construction titan at the moment.

Callout colossus

Those seeking bright earnings and dividend growth also need to take a close look at Homeserve (LSE: HSV), in my opinion.

The emergency callout play’s rapid expansion across North America drove group revenues 24% higher in the 12 months to March 2017, to £785m. But the Walsall business is also making terrific progress in Europe, with sales in France and Spain rising 18% and 34% last year.

My bullish take is shared by the City’s legion of brokers too, who expect Homeserve to report earnings expansion of 14% and 11% in fiscal 2018 and 2019 respectively. And I wouldn’t be put off investing by subsequent P/E ratings of 23.2 times and 20.9 times given the company’s terrific overseas momentum.

Besides, Homeserve’s bright profits picture is expected to keep dividends spiralling higher following last year’s meaty 20% payout hike. Fiscal 2017’s dividend of 15.3p will rise to 16.7p per share in the current year, the analysts say, and again to 18.1p next year. Consequently the stock sports handy-if-unspectacular yields of 2.3% and 2.5% for these periods.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Homeserve. 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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