How to Buy Royal Mail Shares UK [2024]

Born from the vision of King Henry VIII in the 16th century and evolving over hundreds of years into a publicly-traded company, Royal Mail is a cornerstone of the UK’s infrastructure. Now, in the modern world of online stock trading, the opportunity to own a piece of this historic institution is available to all.

Keep reading as we analyze the most important facts about the historical postal service and courier company, explain how to buy Royal Mail shares in the UK, and provide an overview of the most reliable brokers to use.

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What is Royal Mail?

International Distributions Services plc (LSE: IDS), formerly Royal Mail plc, is a British multinational postal service and courier company consisting of Royal Mail, Parcelforce Worldwide, and General Logistics Systems (GLS), established in 1516 as a government department.

Homepage of International Distribution Services. Source: internationaldistributionsservices.com/en

For most of its existence, Royal Mail functioned as a public service, either as a governmental department or a public corporation. However, following the Postal Services Act 2011, a majority of Royal Mail’s shares were publicly listed on the London Stock Exchange in 2013. While the UK government initially kept a 30% stake in the company, by 2015, it sold off all remaining shares, marking the end of nearly 500 years of state ownership.

Annual revenue of the Royal Mail Group for fiscal year 2010 to 2022. Source: statista.com

Despite letter deliveries contributing substantially to Royal Mail’s annual revenue in 2022, a 15% drop in letter services from 2017 to 2022, as seen in the chart below, vividly demonstrates the diminishing relevance of traditional mail in our increasingly digital world.

On the other hand, the company’s parcel delivery revenues witnessed a notable surge in recent years, primarily propelled by the COVID-19 pandemic, which led to the uptick of online economic activities across the UK. In fact, projections suggest digital buyer penetration in the UK is set to reach around 90% of the population by 2025, with the demand for parcel delivery services appearing to be on a sustained upward trend.

Annual revenue from the UKPIL segment of the Royal Mail Group from 2017-2022 by sector. Source: satista.com

Royal Mail is listed on the London Stock Exchange (LSE) under the ticker IDS and is a constituent of the FTSE 250 Index.

Note

While you will be trading shares of International Distributions Services plc, in this guide, we will be referring to the business as Royal Mail.

Where to buy Royal Mail shares?

Thanks to an abundance of online brokers, like eToro, entering the stock market is simpler and more affordable than ever. In fact, purchasing shares in Royal Mail, and investing in stocks in the UK at large, only entails a few straightforward procedures.

That said, choosing a broker that aligns with your specific needs, including your investment goals and trading style, is instrumental in facilitating a seamless trading experience.

With that in mind, let’s delve into the process step by step.

How to buy Royal Mail shares? Step-by-step process

As a publicly-traded company, investors can purchase shares of Royal Mail through a regular retail broker. The subsequent section will offer an in-depth overview of the step-by-step process as well as our recommendation for platforms to use.

Step 1: Choose a broker

As mentioned above, to buy Royal Mail shares online, you’ll need a brokerage account. Your ideal platform should match your investment style (long-term buy-and-hold strategy or active day trading) and needs (e.g., whether you wish to trade more advanced financial vehicles like options). When assessing brokers, here are some crucial characteristics to take into account:

Fees: Brokerage fees are a type of fee collected by brokers to execute your transactions or provide specialized services. Fortunately, today, the vast majority of online brokers offer commission-free stock and exchange-traded funds (ETF) trading;
Security: Choose a trustworthy broker by ensuring it is fully authorized and regulated by the Financial Conduct Authority (FCA);
Trading tools: Some brokers offer fully customizable platforms with comprehensive analysis tools or access to additional data for an extra cost. It’s typically a good idea to look for a user-friendly platform with a competitive fee structure if you are new to stock trading. A dedicated section with investing tips and tricks is a bonus;
Access to market data: Look for a platform that offers solid market research and reporting tools to help you trade confidently with updated data;
Fractional stock trading: Fractional shares enable investors to buy stocks or ETFs by the dollar amount, which is particularly valuable for investors with limited capital and the desire to build a diversified portfolio or investors looking to set up a dollar-cost averaging (DCA) strategy.

To securely invest in Royal Mail and buy IDS stock, consider these brokers:

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2. Interactive Brokers (IBKR)

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Step 2: Fund your account

Once you’ve chosen a broker and set up an account, the next step is to fund your account. Different deposit methods will typically be available to you, including linking a bank account directly, using a debit, credit, or prepaid card, or opting for a third-party payment service such as PayPal (PYPL).

Remember, it can sometimes take up to three days for the money to reach your account.

Step 3: Research the company

The best starting point for researching a company is to investigate its public filings with the FCA. As a publicly listed company, Royal Mail’s annual earnings reports, financial reports, and presentations, as well as recent press releases, can be obtained directly from their investor relations section.

On top of providing insight into Royal Mail’s financial stability and future strategies, these reports also shed light on potential challenges the company, or even the entire industry, might face, ranging from disruptions in the supply chain and burgeoning e-commerce demand to intensifying market competition.

Step 4: Decide how much you want to invest

Now that you’ve decided to buy Royal Mail shares, you must determine how much to invest.

How much you invest hinges on various factors, such as the current stock price and the number of shares you wish to acquire. If the stock’s price is out of reach, don’t worry – consider fractional shares. With fractional shares, you can purchase a portion of a share at a cost that matches your budget.

Yet, given the inherent volatility of the stock market – results are never guaranteed. As a result, only invest what you are willing to lose and carefully evaluate the level of risk you’re prepared to take on.

Step 5: Place your order and buy Royal Mail shares

After deciding the number of shares or the sterling amount of Royal Mail stock you wish to acquire, it’s time to place your order. Simply log into your broker account and enter the ticker IDS in the search bar.

You’ll have two execution options:

Market order: An order to buy shares at the current market price, usually executed instantly (subject to availability);
Limit order: An order activated once the stock hits your specified price. For example, if you wish to buy IDS stock at £200 or below, you’d set the limit price at £200. The order will then be fulfilled once the share price drops to £200 or lower.

Invest in IDS with index funds

Make sure to balance risk and reward in your portfolio by diversifying your holdings. One of the simplest ways to achieve this is through investing in ETFs. Luckily, since Royal Mail is a component of the FTSE 250, it can be found in any ETF that follows that index.

Step 6: Monitor your investment

While a passive management style may be appropriate for a diversified ETF portfolio, investing in individual companies like Royal Mail requires a more proactive strategy.

Start by regularly checking the stock price, providing immediate insights into its short-term performance. However, consider reviewing the same quarterly and annual reports you used in your preliminary research for a more comprehensive understanding. These documents offer valuable information about the company’s financial health, strategic initiatives, and potential challenges.

Furthermore, stay updated with news related to the company and its industry. The thing is—external factors like market trends, regulatory changes, and economic indicators can significantly impact its performance.

Finally, regularly review your investment strategy in light of this information and adjust your portfolio accordingly.

Bonus step: Track the performance of market competitors

Monitoring competitors’ performance in the postal and delivery sector, such as DX Group plc (LSE: DX), FedEx Corporation (NYSE: FDX), and UPS Parcel Service (NYSE: UPS), can serve as valuable points of comparison.

Should I buy Royal Mail shares?

Whether investing in Royal Mail is the right choice for your investment portfolio depends on your risk tolerance and investment goals.

In addition to examining the company fundamentals, you can use technical analysis. With them, you can evaluate the stock and identify trading opportunities in price trends and patterns seen on charts.

The gauge displayed here represents the real-time technical analysis overview of Royal Mail for your specified timeframe. It can simplify trading decisions (subject to your proficiency in technical analysis) by demonstrating the real-time recommendations of popular technical indicators such as moving averages and oscillators.

Disclaimer: TradingView does not recommend trading financial instruments based exclusively on the advice of the Technical Rating indicator. These recommendations cannot predict future movements and are meant as assistance for spotting potentially favorable buy/sell conditions if this is consistent with their strategy.

Common mistakes to avoid when investing in the stock market

Some of the most common mistakes to avoid when investing in the stock market include:

Not conducting thorough research on the stock;
Lacking well-defined financial goals;
Trying to time the market;
Not diversifying your investments across a variety of sectors or asset types;
Allowing your emotions to dictate your investment decisions.

How to sell Royal Mail shares?

You can sell your shares if you see the Royal Mail performing differently than expected.

To do this, simply:

Log on to your broker account;
Navigate to the stock’s detail page;
Input the number of shares or the sterling amount you want to offload;
Tap sell.

Pros and cons of buying Royal Mail shares

Before you buy shares of IDS, take into account both the pros and cons of Royal Mail’s business:

Pros

Robust infrastructure and brand: Royal Mail has an established presence and infrastructure across the UK, which could provide a strong foundation for its operations;
Rise of e-commerce: With the rise of e-commerce, parcel volumes have been increasing, potentially boosting Royal Mail’s revenues and profits;
Income-generating: Royal Mail is a dividend-paying company with a dividend yield of 6.43% as of January 2, 2024, presenting an additional income stream on top of any price appreciation.

Cons

Declining mail volumes: Sending physical letters has been in decline with the rise of digital communication, which could negatively impact revenues;
Operational challenges: The operational challenges of managing increasing parcel volumes, maintaining cost-efficiency, and organizing a large workforce could impact profitability;
Fierce competition: There is increasing competition in the parcel delivery and logistics sectors from both traditional competitors and new entrants.

In conclusion

Even as communication methods evolve and traditional mail usage decreases, Royal Mail’s strategic shift to accommodate the booming e-commerce sector might unlock new avenues for expansion and present a promising investment opportunity.

As with any investment, however, it’s crucial to thoroughly analyze the company’s financial health, industry trends, and potential risks. Whether buying individual shares or investing through an ETF, always consider the need for a diversified portfolio to mitigate risks.

Finally, always remember the stock market is inherently unpredictable, so only invest what you are prepared to lose.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about buying Royal Mail shares