Saga – a dividend champion with serious growth potential
Saga, the insurance provider to the UK’s largest and richest demographic, is currently yielding 7.07%. Last December’s profit warning from Saga was a surprise but the most recent trading update had no such surprises, with traded in line with its expectations for the first four months of financial 2018 to May 31, with investment in customer growth driving its branded policies and cruise bookings. New member scheme records sat at 740,000 as at June 17th, with the motor and home business up 30% and 14% respectively. We also saw their investment in customer growth driving cruise bookings. Since the profit warning and after the collapse of Monarch, who Saga used for their flights, the share price still hasn’t recovered. Saga’s current strategy is evolving, with personnel changes also taking place, such as the search for a new finance head. Fundamentally, we believe the company has a good business model. With Saga having a strong position in its key markets and significant customer loyalty in our view, there could be recovery potential ahead.