MIDAS: Dividends bonanza at staff benefits group Personal Group

| August 19, 2012 | 0 Comments

By
Joanne Hart

15:24 EST, 18 August 2012


|

16:40 EST, 18 August 2012

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.

Looked after: Personal Group's employee benefit plans include not only insurance but also discounted spa days

Looked after: Personal Group’s employee benefit plans include not only insurance but also discounted spa days

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 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.

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