Investors seeking a stock that delivers both capital appreciation through a rising share price and generous dividend growth should look at Irish distribution group DCC (DCC). Perhaps the definition of a superb investment in that the money it spends on the business generates a far greater return that its cost of funding, so snap up the shares at £34.81.

You may not have heard of DCC but it is in the FTSE 250 index, valued at nearly £3 billion and generating more than £10 billion in revenue a year. The business employs more than 10,000 people in 13 countries, is active in five different industry segments and firmly plugged into markets essential for everyday life.

Previously branded as SerCom, DCC’s technology arm distributes IT, communication and home entertainment products for clients including Argos, owned by Home Retail (HOME). The healthcare division undertakes sales, marketing and distribution of pharmaceutical products and contract manufacturing services for health and beauty brand owners. It also handles 1.4 million tonne of waste through a recycling and waste management business in UK and Ireland.

A food and beverage division sells own-brand and third party goods to shops, hotels and restaurants. This arm would benefit from economic recovery in Ireland which now appears to be gaining momentum; indeed the division’s operating profit is now going up after two years of contraction between 2011 and 2013.

The biggest arm within DCC by far is the energy division, accounting for just over half (53%) of group profit in the financial year to 31 March 2014. This is the largest oil and LPG (liquefied petroleum gas) sales, marketing and distribution business in Europe, selling 11 billion litres of product to over 1 million customers over nine countries.

DCC made its largest acquisition to date in August when it spent £84 million on buying Esso’s unmanned petrol station network and motorway concessions in France. This follows a £64 million deal in May to buy similar assets in Sweden.

It reckons the French deal will make 15% return on capital employed, once the transaction has completed in the first half of 2015 (calendar year). Investment bank Jefferies reckons the acquisition could boost group earnings per share (EPS) by up to 4% a year. The transaction reduces DCC’s exposure to weather sensitive heating oil from 20% to 16% of DCC Energy’s volumes and gives the group an initial 4% market share in France.

One of the key attributes sought by investors in a good company is return on capital employed (ROCE) to consistently exceed the weighted cost of capital (WACC). DCC ticks the right boxes with 16.3% ROCE in the year to March 2014 versus a WACC of around 6%. It has delivered an average 18.2% ROCE over the past 10 years, self-financing £914 million of acquisitions over the same period. The business maintains low levels of financial risk and is highly cash generative, meaning it can respond to acquisition opportunities quickly and still have lots of funds to reward shareholders through dividends which have gone up every year for the past two decades.

DCC (DCC) £34.81 BUY

Stop loss: £27.85

Market value: £2.9 billion

Prospective PE Mar 2015: 16.3

Prospective PE Mar 2016: 14.6

1-month relative strength: 3.7%

1-year relative strength: 32.9%

Prospective dividend yield: 2.4%

Bid/offer spread: 0.17%

Growth: MEDIUM

Profit is forecast by rise by 12% and the dividend up by 9.2% this financial year. Consistent gains are the key attraction.

Risk: MEDIUM

There’s foreign currency and weather-related risks but the business is managed very conservatively with a focus on efficiency gains.

Quality: HIGH

A stellar track record of earnings growth, high levels of return on capital employed and consistent dividend growth.