Many benefits of owning company stocks
Here at SavyFox, we cover all topics around investing, and of course we are huge fans of acquiring pieces of wonderful businesses for the long term.
Taking a stake in great companies is a great way to
- generate an ever increasing passive income stream in form of dividend payments and
- to participate in innovation and the success of a business which over time materializes in rising book gains (always remember: short term, the stock market is a popularity contest, long term it’s a weighing machine).
There are fantastic enterprises out there that don’t make any shareholder distribution’s (yet), companies like Amazon, Facebook or Alphabet or Square for instance. These are winning businesses, having a great influence on the way we consume, work, interact (make payments) and how we communicate – and no wonder they made brillaint investments.
In this article though we want to focus on dividend paying companies and their additional benefits – aka shareholder perks – some of the best European companies offer to their stock owners in order to make it more attractive to hold their shares over the long haul. Shareholder perks include benefits like for instance
- gifts like free chocolate
- memberships in a “Shareholder’s Club” e.g. giving access to private and guided through estates of the businesses
- “loyalty bonus” on dividends
- “loyalty shares”
- discounts on services the company offers
As I like to say, shareholder’s tend to always eat well. They benefit of
- cash flows in form of dividends,
- share buybacks which increase their stake in a company,
- they see the market value of successful investments increase,
- they can attend the shareholder meetings and go to nice dinners,
- and sometimes they own stocks where they receive perks each year.
Companies in Europe offering additional benefits to long term stock owners
Here’s’ a list of a selected group of strong businesses that show their appreciation to their shareholders by giving out perks:
- Swiss Lindt & Sprüngli (by far my favorite Swiss chocolate candy producer)
- French Louis Vuitton Moet Hennessey (LVMH; the world leading luxury products conglomerate)
- German SIXT (one of the most dynamic car rental businesses)
- French L’Oréal (the global number one cosmetic company)
Let’s dive right into that group of companies.
Can Lindt & Sprüngli shares be even sweeter than its products?
In our article All these sweet cholocate Dividends we already discussed why we like the consumer staples sector – and the chocolate and candy producers with the strongest brands in particular. Companies like Hershey and Lindt & Sprüngli look back on a long history and their products and profit quality are impecable.
Lindt & Sprüngli has to kind of stocks:
- registered shares (SWX; in the U.S. they trade on the OTC market under tick symbol COCXF) and
- participation certfificates (they trade in the U.S. under tick LDSVF).
With one registered share as of writing having a market value of over USD 113’000 and even with highly priced participation certificates for USD 12’000 it’s clear, why Lindt & Sprüngli might not be the first choice when it comes to taking a stake probably the finest chocolate producer on earth.
The Lindt & Sprüngli participation certificates have no voting rights and shareholders won’t be able to attend the general assembly.
Owners of registered shares attending the general assembly of the company receive a very nice, unique chocolate box with a value of at least USD 150. Now, given the fact that one registered share costs more than USD 100’000, that does not seem a lot as a gift, but just think of that: owners of registered shares are each year invited to a fine fine dinner which would certainly cost USD 100 as well and get the chocoloate box, so every year they receive benefits over USD 250. Just holding Lindt & Sprüngli registered shares, receiving each years rising dividends, looking at nice book gains and additionally going to a feast and receive a chocolate box sounds quite good, doesn’t it?
Yes, owners of participation certificates don’t get these advantages, but still they get a stake in a high quality business that has grown nicely for decades.
LVMH stands for luxury, and so does its Shareholder Club
LVMH has been climbing the tops for decades on the back of its unique brands portfolio with illustre names in its six segments
- Fashion Group
- Wines and Spirits
- Perfumes and Cosmetics
- Watches and Jewelry
- Selective Distribution, and
- Other Activities.
We have covered that amazing company in our article LVMH is an expensive diamond, just have a look at it if you want to have some deeper insight on that business.
Now, let’s come to the LVMH Shareholder’s Club which is tailored to individual shareholders with interest in LVMH and in particual in its amazing portfolio of brands and companies,
Any shareholder holding at least one LVMH share which is listed on the Paris Market, can become a LVMH Shareholders’ Club member. To join the Club you can sign up online. Every member gets a card with a personal identification number, valid for 2 years.
Now think of that: Club members can visit premises where they receive an especially warm welcome: from Hennessy’s centuries’ old cellars to the magnificent crayères at Veuve Clicquot. They also get the opportunity to discover LVMH group “Maisons” at unique locations such as the Louis Vuitton workshops in Asnières. Such welcome dinners and visits would cost at least USD 150 each if one had to pay for them. And here’s the thing: these offers are uniquely for LVMH shareholders.
In addition to special offers on a selection of the Group’s wines and spirits, for delivery in France only, Club members can purchase discounted subscriptions to Group media publications – Les Échos, Investir, Le Parisien and Connaissance des Arts – and order priority-access tickets for the Fondation Louis Vuitton.
One SIXT stock ensures lifelong discounts on car rentals
In our article Tough Times made SIXT a Winner we covered the spectacular recovery of the more than one hundert year old car rental giant which faced extremely severe headwinds when in 2020 the COVID-19 pandemic brought the whole world to a litteral standstil. Unlike its competitors Europcar and Hertz, the financial discipline, vision and focus on diligent execution of its operations put SIXT ahead of the pack. And SIXT clearly has an edge compared to its rivals by developing its own software and a bunch of sophisticated technological solutions. SIXT clearly is more innovative and more visionary than other car rental companies.
Now it’s important to state, that SIXT eliminated its dividend in 2020 to preserve cash and it will take a few years, until SIXT will fully reinstate its previous dividend policy. It’s a bit like The Walt Disney Company, that – like SIXT – came out of the COVID-19 pandemic a whole lot stronger and dynamic than before. And sometimes, a dividend cut can be a good sign.
Now let’s come to the shareholder perk SIXT offers, shall we?
By holding just one SIXT share (preferred share or common stock) one gets a 20 % on rental car fees. Now that’s an interesting one and it is super easy to benefit of that shareholder discount. It just requires to apply for the SIXT card and to show per e-mail [email protected] that one is shareholder of SIXT via a print screen.
Other shareholder benefits
Some companies make holding their shares additionally attractive by giving long term stockholders
- additional loyalty bonus dividend incrases (e.g. L’Oréal) or
- additional loyalty shares (e.g. Campari Group, see here a stock snapshot on that business).
L’Oréal’s investors are rewarded handsomely for their loyalty
With L’Oréal, well, shareholders have a stake in
- a European Dividend Aristocrat that managed to steadily increase dividends since 1988;
- a business with a unique brand portfolio including Georgio Armani, Yves Siant-Laurent, L’Ancome, Ralph Lauren, Prada, Valentino, Maybelline New York, Garnie to name just some of them;
- a company with incredibly diversification and strong pricing power with regard to its products ensuring high margins of its cash cows
With L’Oréeal, we are talking here about a business that managed to incrase its dividend by 10 % annually.
Furthermore, shareholders that have been holding their stocks for more than two years, receive a loyalty bonus of +10% on their dividend payment. Now, that’s a nice boost to passive income generation, isn’t it?
Shareholder’s just have to register their shares. See here how to proceed to become eligible to the loyalt bonus.
It’s definitively worth being a long term shareholder of high quality businesses with uniquely strong economic moats. Not only do stock owners participate in the success of the companies in form of rising dividends, share buybacks and book gains, but some businesses also reward them with gifts and benefits.
Of course, such shareholder perks per se are no reason for itself to buy a stock. But they represent one additional advantage of being a long term oriented shareholder, reminding that we don’t own just stocks. We are owners of pieces of businsses and have a valuable long term oriented participation in strong companies.
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.