Royal Mail
When Royal Mail, led by chief executive Moya Greene, listed on the stock exchange a year ago there was huge interest. The share price soared on the first day of trading, starting at £3.30, and hit £6. But wise investors have taken profits from their shares and the price has since pulled back to around £4.20.
This is a competitive sector says Neil Craze, investment manager at stock brokers Redmayne-Bentley and Royal Mail faces fierce rivalry from Amazon and Dutch firm TNT.
There are more companies, particularly in London, who are willing to do door-to-door deliveries for consumers and businesses. Craze says: ‘The firm faces the possibility of further strike action, and that will always be a problem for a business where unions are involved. There is also a big pension deficit.’
On top of that, the way people communicate is changing. Thanks to technology there has been a big fall in the number of letters being sent, which is the core of Royal Mail’s business.
‘If you just want an income then it could be OK – the dividend yield is around 4.5 per cent – but there’s not much growth left,’ says Craze.
