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Graham Spooner

Shareholder Perks

Written by: Graham Spooner on June 28th 2011

Category: FTSE 100, Investments, Shares

If you struggle to keep tabs on which companies are offering shareholder perks then read on, as Graham Spooner, Investment Adviser at The Share Centre, highlights 3 key sectors which offer incentives.

Only a small number of companies offer perks to shareholders and as these can change quite frequently, with some companies only offering one-off benefits, keeping track can be a challenge.

An increasing number of brokers hold stocks in nominee accounts and although this doesn’t impact the investment, it can sometimes cause a problem when claiming perks. As a retail stockbroker we endeavour to obtain available perks for all clients that have qualifying holdings, however, some companies won’t issue the perk if the holding is in a nominee account.

Perks may be of interest to shareholders who regularly use the services of the company they have a holding in, for example those that travel extensively may benefit from the discount offered by International Consolidated Airlines Group on British Airways flights. However, we never recommend a share purely for the perks it offers and we would hope investors would view these benefits as secondary to the potential of the underlying business.

The retail sector

Retailers tend to offer a discount scheme or vouchers as a perk for shareholders. This helps to encourage shareholders to make purchases in store and develops a form of brand loyalty.

This sector is one of the most popular in the FTSE as it plays host to a range of familiar UK businesses and private investors sometimes form emotional attachments to a particular stock. Retailers are feeling the squeeze as consumer spending is tightened by the economic conditions so this type of perk is particularly welcomed at this time.

FTSE 100 companies, Marks & Spencer and Next both offer discount vouchers to their shareholders which are issued once a year. While Marks & Spencer rewards all shareholders, Next only issues its 25% discount vouchers to those holding 500 shares or more. Both of the companies issue the perks to those holding shares in nominee accounts, however cash and carry retailer Booker only issues its discount card to those holding shares in their own name.

Other companies that issue perks in this sector are Laura Ashley, Beale, Blacks Leisure, Moss Bros, Mothercare and Thorntons.

The insurance sector

Saving for retirement has become the focus for the British public and we are seeing an increase in savings plans and retirement policies. Takeovers brought the sector into focus last year and analysts are now looking to where the next deal may come from. Competition in this sector remains tough, so companies offering shareholders discounts and special terms on products to incentivise sales are expected.

Aviva, the UK’s largest insurance provider, saw weaker life assurance sales in Q1 and Legal & General’s sales growth came from emerging markets.  Both Aviva and Legal & General issue perks in the form of discounts and special terms on products to shareholders in nominee accounts or in their own name with no minimum holding conditions.

The travel and leisure sector

This sector offers investors exposure to both high-yielding stocks with some defensive qualities and, for the more aggressive investor, stocks with higher levels of risk and growth potential. Shareholder perks in this sector tend to be issued in the form of discount vouchers or privilege cards.

Marston’s, for example, issues a privilege card offering 20% discounts on food and accommodation to shareholders holding a minimum of 84 shares upon request. It is not surprising that the perk concentrates on these areas as the company is focusing on becoming family friendly and food sales have provided a vital boost to the company coffers. The group is also promoting a new business model for tenanted pubs.

TUI Travel is one of the companies which apply several conditions to qualify for the discount scheme it offers its shareholders. When booking the holiday shareholders must hold at least 500 shares and must have been a registered shareholder for over a year.

Whilst most companies offering perks in this sector include those with holdings in nominee accounts, Intercontinental Hotels only offers its discount perk to shareholders with holdings in their own name.

Other companies that issue perks in this sector are Greene King, The Restaurant Group, Thomas Cook and Young & Co’s Brewery.

Shareholder Perks Guide

For more information on Shareholder Perks read our guideof companies who currently offer incentives.

All information given including prices, yields and our opinion is correct at the time of publication.  Our opinions on investments can change at any time and for our latest view please go to www.share.com.  To understand how our Advice team arrive at their views please read our Investment Research Policy.

Tags: Legal & General, Marks & Spencer, Marstons, TUI Travel

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