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How to Buy Royal Mail Shares UK in 2022- A Beginner’s Guide

Author: Michael Graw

Please note that we are not authorized to provide any investment advice. The information on this page should be construed for information purposes only. We may earn commissions from the products mentioned on this site.

Royal Mail has been operating in the UK for over 500 years, and there are very few companies anywhere in the world that can claim such a long history. Yet while the service was owned by the UK government for most of that time, Royal Mail was privatised and began trading on the London Stock Exchange in 2013. Now, anyone in the UK or abroad can buy Royal Mail shares and own a small piece of the UK postal service.

We’ll compare UK brokers and walk you through the basics of buying Royal Mail shares.

Table of Contents

Contents [show]

    Where to Buy Royal Mail Shares

    The main way to buy Royal Mail shares in the UK is to use a broker that is regulated and approved by the Financial Conduct Authority (FCA). The FCA is the UK’s financial watchdog, so you know you’re getting a trustworthy broker if the platform is regulated by this organization. Thankfully, there are many licensed stock brokers that offer trading for Royal Mail shares at a low cost.

    Importantly, there are two ways you can get financial exposure to the share price of Royal Mail. You can either buy shares outright or trade contracts for difference (CFDs). CFDs allow you to trade with leverage, which increases the effective size of your investment. However, you’re not eligible to collect dividends when you own CFDs like you are when you own shares.

    With that in mind, let’s dive into a comparison of the popular five share brokers you can use to buy Royal Mail shares:

    1. eToro

    eToro is popular because it offers such a wide range of investment options. You can invest in many UK companies trading on the London Stock Exchange as well as US and Asian shares. In all, this brokerage gives you access to shares for more than 800 companies around the globe.

    One of the most notable things about this platform is that it allows you to both buy shares in the traditional sense and trade CFDs, meaning you can choose to short sell shares or apply up to 1:20 leverage. There’s no commission, and the spreads on share trades are very competitive.

    eToro is also a social trading network, meaning you can follow and interact with other traders, in addition to joining discussions around individual shares. Beginner traders may want to take advantage of eToro’s CopyTrader feature to mimic the positions of professional traders, meaning you can invest passively!

    You can get started on eToro with a $200 minimum deposit, and it supports a range of payment methods, including e-wallets like PayPal. There’s also the eToro for mobile trading. With licenses from the FCA and other leading authorities like ASIC, eToro is one of the most secure and reputable brokers on the market.

    Our Rating

    75% of retail investor accounts lose money when trading CFDs with this provider. Sponsored ad

    2. Plus500

    Plus500 offers a CFD trading platform that caters to beginner and advanced investors alike. The charting interface is easy to use, while still offering dozens of technical studies to help you decide how to invest your money. You can also take advantage of price alerts on this platform so that you never miss an opportunity to buy Royal Mail shares on a pullback.

    This broker only offers CFD trading for shares, but you get access to hundreds of global companies. If you want to increase the size of your investment, you can trade with leverage up to 20:1. Plus500 is a UK-based broker with an FCA license, and it’s parent company is listed on the London stock exchange, so it’s a very trustworthy platform.

    Plus500 doesn’t charge any trade commissions and the spreads are highly competitive. In addition to shares, Plus500 also offers forex trading, commodity trading, and cryptocurrency trading, all in the form of CFDs. Note, though, that you won’t get access to trading signals or custom strategy development tools if you want to get into active trading for these assets.

    Our Rating

    80.5% of retail investor accounts lose money when trading CFDs with this provider. Sponsored ad.

    3. Capital.com

    Capital.com is an ideal broker for spotting opportunities that other traders might miss. The platform comes with advanced trading software that uses AI to scan the market for trade setups. You can customize this AI trading bot to match your trading style and goals, which opens up a lot of possibilities for active trading.

    This broker also goes out of its way to offer account holders access to in-depth educational tools. You’ll find guides to help you get started with share trading, forex trading, and commodity trading. Plus, Capital.com has built a mobile app specifically designed to educate traders about strategies, risk management, and more. Like many other brokers, Capital.com also offers a free demo trading account.

    Unfortunately, Capital.com’s selection of shares is somewhat limited. You get access to major companies on the London and New York Stock Exchanges, but there are relatively few companies from across Europe and Asia. CFD trading with this broker is free of commissions and non-trading fees are kept to a minimum, which is a positive.

    Our Rating

    There is no guarantee you will make money with this provider. Sponsored ad

    Why People May Invest in Royal Mail

    Royal Mail has a vaunted history and is beloved by the UK public.

    Mail Volume is Rising

    One of the most bullish arguments for Royal Mail is that mail volume in the UK is rising. That’s been true for a number of years thanks to the growth of eCommerce as a fraction of overall retail sales in the country. But it’s particularly true in the wake of the coronavirus pandemic, as UK residents turned to the mail system for an overwhelming amount of their purchases.

    Royal Mail mail center

    Right now, Royal Mail accounts for around half of all mail volume in the UK. In fact, analysts at Citigroup believe that Royal Mail’s 2020 profit forecast may be underestimated by as much as 400%!

    Royal Mail Shares are Cheap

    Another point that’s potentially in Royal Mail’s favor is that the share price is beaten down – perhaps overly so. As recently as 2018, Royal Mail shares were trading at a price of 598p. Fast-forward to April 2020, in the midst of the coronavirus pandemic, and the shares hit a bottom of 124p.

    The Dividend May Return

    Royal Mail suspended its dividend as a way to keep extra cash on hand during the coronavirus pandemic. But before that suspension, the company paid out 7.5p per share to investors.

    There is of course no guarantee that Royal Mail will reinstate its dividend at all, or that it will offer the same yield if it returns.

    About Royal Mail Shares

    Company and Share History

    Royal Mail was established in 1516 by King Henry VIII and was first made available as a public postal service throughout England in 1635. In the 20th century, the reach of the postal service was extended throughout the British Empire.

    In 1969, the postal service was modified from a government department to a state-run corporation. This arrangement lasted until 2011, when the organization was privatised and 10% of shares were given to Royal Mail employees. The company began trading on the London Stock Exchange in 2013.

    Importantly, the British government maintains some requirements of Royal Mail. For example, the service must continue to offer universal fixed-price service within the UK at least through 2021.

    Royal Mail Share Price

    Shares of Royal Mail rose in value rapidly when the service was first listed on the London Stock Exchange and the company consistently traded above 400p per share until 2018. Shares peaked at 598p in May 2018 before falling abruptly to an all-time low of 124p per share in April 2020. The share price has recovered slightly, in part thanks to Citigroup’s ‘Buy’ rating for the company.Royal Mail shares price chart

    How to Buy Royal Mail Shares 

    To show you how to buy Royal Mail shares from an online investment platform, we’ll walk you through the process.

    Step 1: Search for Royal Mail Shares

    Enter ‘Royal Mail’ in the search bar at the top of the page. When the company appears in the drop-down menu, click on it.

    Step 2: Click on ‘Trade’

    On the Royal Mail page, click on the ‘Trade’ button on the right to open an order form.

    Step 3: Buy Royal Mail Shares

    In the order form, you’ll need to decide on several important parameters that control your trade:

    • Amount: You need to enter how much money you want to invest in Royal Mail. Either enter an amount in US dollars or click ‘Units’ and specify a number of shares to buy.
    • Set Rate: You can either decide to buy Royal Mail at the current market rate or specify a lower price. If you set your own price, eToro will only execute your purchase if the price of Royal Mail falls below your limit.
    • Stop loss: Setting a stop loss is a good way to prevent a bad trade from turning into a huge loss. If the price of Royal Mail shares falls below your stop loss price, eToro will automatically sell all of your shares to limit your losses.
    • Take Profit: A take profit level is similar to a stop loss, except that the platform will sell your shares for a profit when they reach a specified price. If you are investing in Royal Mail for the long term, you may not want to set a take profit level.
    • Leverage: You can also specify whether or not you want to use leverage when trading share CFDs. Beginner traders should be extremely cautious with leverage. While leverage can magnify your profits, it also multiplies your losses when a trade goes against you.

    When you are ready to buy Royal Mail shares, click ‘Trade’ to complete your order.

    Conclusion

    Royal Mail has a long history in the UK and the company enjoys wide popularity. While the share price has taken a nosedive in recent years, some analysts believe the company is now undervalued and offers a fair degree of upside.That said, it’s impossible to tell what the future holds for Royal Mail and it is likely to be rocky even if mail volume remains high.

    FAQs

    What is Royal Mail’s ticker symbol?

    Royal Mail trades on the London Stock Exchange using the ticker symbol ‘RMG’.

    Does the UK government still own part of Royal Mail?

    Around 60% of Royal Mail’s value was privatised when the company first began trading on the London Stock Exchange in 2013. But in 2015, the UK government divested its remaining ownership. Today, the UK government does not own any stake in the postal service.

    A-Z of Shares

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    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

    Michael is a writer covering finance, new markets, and business services in the US and UK. His work has been published in leading online outlets and magazines.

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    eToro: Buy Shares with 0% Commission
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