Investment

The Hidden Perks & Discounts of Investing in Certain Stocks

The Perks and Discounts you can get for being a Shareholder

Usually when people buy shares of a company, they are doing it with the expectation of receiving dividends and/or capital appreciation. However you might not be aware that some companies also offer their shareholders perks and discounts.

In some cases they could be another neat incentive for buying a company. In this article we will reveal all you need to know about shareholder perks and discounts.

The types of benefits you can expect

There are two main forms the benefit comes in. Firstly, in most cases you are entitled to discounts on the company’s product or services. They can either be redeemable once per year or on-going discounts. In some cases they can be really good value for money. Examples include the likes of Next who give you a one-off 25% voucher to be used once a year.

The other type of benefit are perks. Perks vary greatly according to the company. They can be free product samples or in some cases give you the chance to enter a ballot for prizes.

One such prize offered by National Grid, is the opportunity to attend a shareholder networking programme. A quirky example that shows you just how varied these perks can be.

Why companies offer them

Companies offer them for a variety of reasons. Often it is to show appreciation to their shareholders and sometimes it can even be to make them more attractive to prospective investors. They can also be a great way for a company to foster loyalty from their shareholders and to promote their brand.

How to discover any perks

The best and most direct way to find out is to contact investors relation for the company you are interested. Contact details can be found on the investor section of their website. In some cases the benefits will be clearly listed on the webpage. However by directly calling the website you may be able to find some perks that aren’t widely promoted.

Another way to find out is to ask your broker. Hargreaves Lansdown for instance provide a summary of known UK shareholder perks [1].

Make sure to check what the eligibility criteria is for each company. This can range from having a specified number of shares and/or holding shares during a certain period. Next for example, require you to be holding at least 100 shares by the 1st of April to be eligible for their 25% discount [2].

How to redeem your perks

In order to get these perks you need to be able to demonstrate proof of ownership to the company. In the old days this was much simpler as most stock investors would have paper certificates detailing their ownership.

However given the rise in stockbrokers, it is usually your stockbrokers such as Hargreaves Lansdown or AJ Bell who would keep these certificates on your behalf in nominee accounts.

This would mean the name on the shareholder certificate would be the name of your nominee (AJ Bell for example) instead of your name. Nominee accounts are popular as they lead to lower transaction fees and make it easier and cheaper to do regular investing or dividend reinvesting [3]. The alternative would be holding shares directly which can be costly.

Some companies require the certificates to be in your name whilst others are happy to allow a nominee to be on them. In that case you would just need to go via your stockbroker to obtain proof of ownership or ask them to facilitate for you. The only hiccup here is it can often require quite a bit of admin to satisfy some of the requirements.

Hargreaves Lansdown are one of the more helpful stockbrokers as in many cases they will facilitate the process for you if you request it. Low-cost brokers such as Trading212 will most likely not be able to provide more than a monthly statement after which, it is at the benefit provider’s discretion whether to accept.

Should you buy shares just for the perks?

In the majority of cases no. Generally the value of the benefit will be small relative to the cost of the shares.

Therefore the success of your investment will still depend on the company’s performance. You could end up in the red if you skipped your due diligence and the company’s share price suffers. Also do keep in mind that companies can withdraw these perks at any time. You should do your usual research and treat any perks as a nice added bonus.

However in some cases, the perks could be a compelling reason to buy a stock. This is where the benefit offered is significant relative to the value of the eligible shares.

Take Bloomsbury Publishing. Owning just 1 share which currently is worth around £3.50, entitles you to 35% off the retail price of their books [4]. Therefore you only need to spend £10 to make your initial £3.50 back with the 35% discount.

Any discount on top of that is just a free bonus. If you have £100 worth of books to buy, the 35% discount of £35 would effectively 10x your money!

Summary

So there we have it. We hope we have opened your mind to the world of shareholder perks and discounts. Some of these perks can be pretty neat so make sure to check if any of your investments qualify. If you find an amazing deal, then do consider sharing it with us and other investors on social media or via our telegram groups.

Please also remember to subscribe to our mailing list if you haven’t already!

References

[1] https://www.hl.co.uk/shares/shareholder-perks

[2] https://www.nextplc.co.uk/investors/shareholder-information/shareholder-discount

[3] https://www.sharesmagazine.co.uk/article/dont-miss-out-on-extra-shareholder-rewards

[4] https://www.bloomsbury-ir.co.uk/investor/i_benefits

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