Companies That Offer Additional Benefits For Shareholders
Usually, when I talk about equity ownership I’m going on and on about wealth creation, passive income streams, financial freedom,
yahdayahdayahda. I’m always harping on valuations and buying stock at a discount. Well, in this piece I’ll discuss another benefit of owning certain equities: the discounts on the goods and services that certain companies offer their shareholders. Not every company in the market offers shareholder rewards outside of the usual realm of dividends and buybacks, but there are a select few that give shareholders added rewards. From discounts on travel, tissues, and tools, to cheaper insurance rates and even bottles of wine, investors in the 7 companies listed below have the opportunity to receive unique shareholder benefits.
Berkshire Hathaway (BRK.B) (BRK.A)
Berkshire Hathaway is one of the few positions that I own that doesn’t contribute to my income stream. Even though it doesn’t pay a dividend, BRK.B is one of my favorite defensive holdings. And although Mr. Buffett and Co. aren’t lining my pockets with cash directly, being a Berkshire shareholder does come with numerous added benefits (outside of the astronomical historical returns that Berkshire has provide long-term investors). Due to the conglomerate nature of this business, BRK.B shareholders are owners of a wide variety of businesses. During Berkshire’s annual shareholder meeting in Omaha investors are able to reap the rewards of this exposure with discounts across many of the merchants that Berkshire owns. But, if you’re not interested in traveling to the heartland (which I would suggest, I’ve been to Omaha before and it’s great!), one easy way to get a shareholder benefit is to call you GEICO agent. We insure our cars with GEICO and received a discount on our coverage . It wasn’t massive, but every little bit helps, right?
Carnival Cruise Line (CCL)
Investors who own 100 shares of CCL, which will cost you ~$6500 at current share prices, are offered discount credits when booking cruises with the company.
Source: Carnival Benefits Page
I’ve considered going on a cruise several times before. Assuming I bought 100 shares, getting a $100 credit for a weeklong cruise is like a 1.5% dividend (on top of CCL’s current ~2.4% yield). CCL is solid dividend grower. Although the company doesn’t have a long annual dividend increase streak due to the very cyclical nature of its business which relies heavily on consumer disposable income, the company’s dividend has posted a 9.6% CAGR since 1999 and after freezing its dividend in 2012, 2013, and 2014, CCL has rewarded shareholders with 3 consecutive years of double digit increases.
Right now, trading for less than 16x 2018 EPS expectations, CCL appears to be trading with a reasonable valuation. Obviously making a $6500 investment just to save a few hundred bucks on a cruise isn’t a justifiable investment thesis, but then again, if you’re an avid cruise goer and you’re looking to add some cyclical, consumer discretionary exposure to your portfolio, I think CCL is worth a look because of the money it will save you on your travels combined with the likelihood of capital appreciation and dividend growth benefitting from the strong demand we’ve seeing for travel in recent years.
Source: F.A.S.T. Graphs
Royal Caribbean (RCL)
If you’re interested in a cruise, this list is getting better and better for you. Carnival isn’t the only cruise company offering shareholder benefits, Royal Carribbean Cruises offers a program that essentially mirrors CCL’s. However, since RCL’s share price is currently north of $121/share, it will cost you a bit more money to purchase the 100 shares necessary to qualify for this company’s benefit program.
With that said, from a dividend growth standpoint, it doesn’t get much better than the 53.6% 5-year dividend growth rate that RCL currently boasts. RCL currently trades for ~16.5x 2018 expected EPS, meaning that the market is putting a slightly higher premium on RCL than the much larger CCL. RCL’s growth has been and looks to continue to be higher than Carnivals, indicating that this smaller and more nimble cruise line carrying a premium valuation relative to its peers is likely warranted.
Norwegian Cruise Line (NCLH)
Source: NCLH Shareholder Benefits Page
Norwegian Cruise Line doesn’t pay a shareholder dividend, but they do offer a shareholder benefits package very similar to both CCL’s and RCL’s. 100 shares of NCLH will come with the cheapest price due to NCLH’s $55 share price. What’s more, even though NCLH isn’t a dividend growth company, it has produced outstanding growth in recent years and appears to the the cheapest major cruise line on the market, selling for just 11.7x 2018 expected EPS.
Source: F.A.S.T. Graphs
3M Company (MMM)
It should come as to surprise to investors that 3M, known for its 59-year annual dividend increase streak, is also generous when it comes to alternative shareholder benefits. I’d heard that MMM offers a holiday gift box for shareholders and employees, but even though I’ve been a shareholder for a couple of years now, I’ve never ordered one before. I contacted MMM’s investor relations team and was quickly sent a link to buy the holiday gift box as well as a promo code for the correct pricing. This year’s box cost is $26 (within the contiguous U.S.; it’s $34 if you leave in Hawaii, Alaska, or Puerto Rico) and contains 18 MMM items. The contents of these boxes come to MMM shareholders at a discount to retail value. Unfortunately, I couldn’t figure out exactly which 18 items come in the box when doing my research, but all in all, I assume that an annual 3M holiday box order will go a long way towards covering regular home chores/repairs at a friendly discount.
Kimberly Clark (KMB)
KMB is another dividend aristocrat that offers investors a holiday themed basket of goods at a discounted price. Unfortunately, it’s too late to claim 2017’s basket, but shareholders who’re interested in cheap tissue and diapers should check back in with KMB’s investor relations team in the fall/early winter next year.
Willamette Valley Vineyards (WVVI)
In the last piece I wrote I talked about my love for Vermont playing a role in my purchase of Vail Resorts due to their recent purchase of Stowe Mountain Resort. Well, Willamette Valley Vineyards is another company that I have an emotional draw to. The Willamette Valley brings back fond memories of my wife’s professional running career and the 2012 Olympic Trials that were held in Eugene, Oregon. That was an amazing week and without a doubt, that is a special area of the country. What’s more, I have a background in vineyard management and I’m a believer in the long-term viability of this industry.
Willamette is an interesting small-cap. The company owns a handful of vineyards across Oregon and seems to be doing a good job of using its profits to re-invest back into its vineyards and expand. This isn’t the type of company that I usually consider buying, but the idea of owning a vineyard is a romantic notion (especially for someone who has a history of managing the grapes). But, you don’t have to be a former farmer to be interested in buying shares of this company. I imagine that wine lovers would also like the idea of exposure to the industry within their portfolios, not to mention the fact that WVVI offers a 25% discount to shareholders on its products (which includes several bottles with scores above 90 by Wine Enthusiast).
Obviously, a discount on wine isn’t a good enough reason to buy equity in a company alone, but I think WVVI at least worth a look for investors interested in this benefit and increasing their domestic, small cap exposure.
Disclosure: I am currently long BRK.B, MMM, and KMB.