Dividends bonanza at staff benefits group
The investment column that makes the most of your money
PERSONAL Group pays dividends every quarter, has grown consistently since it was founded 28 years ago and provides a service to lower-income workers nationwide.
The shares yield more than five per cent and the firm has appointed a new chief executive, Mark Scanlon, with a brief to expand the business. So far, so encouraging.
Personal Group offers benefits primarily to blue-collar employees such as postal workers, train drivers and couriers. There are three core products – cash plans, which offer policyholders extra money if they have an extended stay in hospital, convalescence plans, to be used on return from hospital, and death benefits, which pay out lump sums to close family in the event of a worker’s death.
The cost of a subscription is relatively modest at £1 to £5 a week, but offers low-paid workers peace of mind, and more than 250,000 staff have bought into the plans.
Initially, these were the only products that Personal Group offered, but recently it has moved into a range of other benefits, such as discount vouchers for supermarkets and cinemas, and reduced fees for dental and optical care.
The group works almost exclusively with organisations employing at least 1,000 staff and creates bespoke plans for those businesses, from which employees can pick and choose benefit packages.
Personal Group, as its name suggests, takes pride in adopting a personal approach, so its staff go into companies and talk to staff individually, explaining the benefits on offer so there is less chance of confusion or misunderstanding. Plans are updated every couple of years to reflect changing trends. Many packages now include discounted spa days for example – a perk that few train drivers would have chosen for themselves or their partners some five or ten years ago.
Personal Group makes most of its money from the insurance plans it offers and annual results have to consider their options. If Titan Inc receives the 51 per cent acceptance it needs during that period, shareholders will have a further two weeks to sell in the market if they want.
Midas verdict: Readers who bought in 2010 have been well rewarded. They should keep hold of their stock and watch events closely. There is plenty of time to sell in the next few weeks and just a chance Mefro will up the ante. been rising steadily. The group was founded in 1984 by insurance veteran Christopher Johnston. He built up the business with a loyal team around him, most of whom are still there.
Johnston is 69 and four of the six other directors are in their 60s. But last year, the board decided it needed some fresh blood and Scanlon, 44, was appointed.
Having spent most of his career in growth businesses, including several years as commercial director at vacuum cleaner maker Dyson, Scanlon is keen to develop Personal Group.
He wants to extend the range of benefits it offers, increase customers and invest in technology so that they can receive updates about benefits via emails and text messages. Online services are already available and younger customers, many of whom go nowhere without their mobile phones, prefer them.
Personal Group’s range of products offers companies a handy way of making employees feel wanted, even when pay increases are low or non-existent. Perks help attract new workers and retain staff and more businesses than ever are looking at these types of benefits in today’s tough environment.
Next month, Scanlon will unveil his strategy. The focus will be on growth, but Personal Group’s core offering will be unchanged. Customers will continue to receive attentive service and shareholders will still receive healthy dividends.
Analysts expect profits to be slightly lower in 2012, reflecting investment in the future, but Personal Group is highly cash-generative so the dividend on shares now trading at 346½p is forecast to rise from 17.4p to 17.8p, payable in four equal instalments next year.
Midas verdict: Personal Group has grown steadily since the 1980s and is set to increase its firepower over the next few years. The shares offer an attractive blend of income and excitement. Buy. This newspaper adheres to the system of self-regulation overseen by the Press Complaints Commission. The PCC takes complaints about the editorial content under the Editors’ Code of Practice, a copy of which can be found at pcc.org.uk.