Comment: why investors love buying shares in Homeserve

Talk to fund managers who invest in Homeserve and it’s like you’re discussing their favourite son.

They come over all misty-eyed.

Little wonder, given how much the stock has done for their bonus targets in the past five years.

In return for a monthly premium, Homeserve guarantees to come round to your house and fix your boiler, heating or plumbing when it goes wrong. It also has a new service it bought in 2017 called Checkatrade, an online directory of recommended tradespeople, popular among younger folks who can barely change a lightbulb.

The company has been rolling out globally for years, and these days makes more money from the US than its home market of the UK. The pace of growth among the over-50s in America has surprised even its founder chief executive Richard Harpin, as homeowners and utility providers sign up to its membership model in droves.

It has a reputation for solid earnings growth and today was no different, despite the coronavirus.

How many other companies out there have put up their divi 10% and barely touched the sides of the balance sheet?

I’d expected signs of strains from customers struggling to keep up with the membership fees, but in fact, Harpin says covid makes them ever more keen to make sure their homes are running reliably and safely as we all spend so much more time in them.

There will be a short-term hit as people have been delaying getting jobs done through Checkatrade for fear of having strangers tramping through the house. But even in that business, there’s a covid positive, as more tradesmen have been paying to join as they fight to get their businesses back on their feet as lockdown eases.

In the meantime, Harpin’s crew have learned through covid to do more quotes via video online at Checkatrade and helping self-isolating customers do their own fixes with advice over the phone.

Having slumped in March, the shares have rallied massively and aren’t far off their record levels pre-covid, so it’s perhaps not one for the bargain hunters. But for its loyal fans, it has delivered in spades. Little wonder they’re so fond.