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How to Buy Rolls-Royce Shares UK – Beginner’s Guide

Disclaimer Fact Checked

Rolls-Royce Holdings PLC is a UK-based engineering company that designs, manufactures, and sells power systems for aviation and several other industries. It is the world’s second-largest manufacturer of aircraft engines and is one of the three major manufacturers dominating the power systems industry. Further, Rolls Royce is an FTSE 100 composite with a market capitalization of £8.73B as of May 2021.

In this guide, we show you how to buy Rolls-Royce shares online in the UK. We also highlight popular brokers you can use to buy shares online and analyse Rolls-Royce Holdings PLC’s share price history.

Find a UK Stock Broker That Offers Rolls-Royce Shares

Rolls-Royce Holdings Plc logoThe first step you’ll need to take is to find a trusted UK share dealing broker that offers share trading on the London Stock Exchange (LSE). There are plenty of online stock brokers in the UK, but you do need to ensure that your chosen broker offers competitive fees, a range of platforms and tools, and is regulated by the FCA. 

To make things easier for you, let’s take a closer look at two of the most popular UK brokers that allows you to trade shares of Rolls Royce Holding plc.

1. eToro

etoro logoIf you are a UK investor that wants to buy Rolls Royce shares, eToro is a popular choice. This online share dealing platform hosts over 800 shares from various leading exchanges across the globe including the London Stock Exchange, so you can invest in many of the most popular shares. It is also very competitive when it comes to pricing, as you can buy shares and other financial products without paying any share dealing charges or fees.

One of the most notable aspects of eToro is that it allows you to buy and sell shares outright or via CFDs. On this platform, you can ‘physically’ buy the underlying asset and become a legal shareholder of the company, or you can speculate on Rolls Royce’s share price without owning the asset. As eToro must comply with the FCA, it also allows users to trade shares CFDs with a leverage ratio of up to 5:1.

eToro is also well known for its social trading environment and copy trading tools. In fact, it is one of the largest social trading platforms in the world with more than 24m registered users on its platform. As a social broker, eToro allows you to engage with other users, while you can also use its CopyTrader tool to copy trades of top-performing traders.

eToro is heavily regulated by the FCA in the UK, ASIC in Australia, and CySEC in Cyprus. On top of that, the broker is also a member of the Financial Services Compensation Scheme (FSCS), meaning every investor will be compensated with up to £85,000 in case the company goes bankrupt.

In the UK,  you will need to meet a minimum deposit of $10 (around £7.60). To deposit funds, you can use a credit/debit card, bank transfer, or e-wallet payments such as PayPal, Skrill, Neteller, etc.

Stock Trading Fees 0% commission + spread
Deposit Fees No (0.5% conversion for non-USD deposits)
Withdrawal Fees $5 (£4) per withdrawal
Inactivity Fees $10 (£7.60) per month after one year
Monthly Account Fees No

Sponsored ad. 68% of retail investor accounts lose money when trading CFDs with this provider.

2. Plus500

Plus500 Logo

If you are interested in shorter-term trading, you might be more suited for a CFD platform like Plus500. The online trading platform not only gives you access to thousands of financial instruments but also allows you to leverage your capital with a 5:1 ratio on shares.

The reason why Plus500 has become one of the most popular CFD brokerage firms in the United Kingdom and worldwide is its user-friendly platform, and low-cost pricing structure. The broker gives you the option of managing your account via its web-based platform or mobile trading app. It is also worth mentioning that you will get access to built-in price alerts, and a range of risk management tools.

If you wish to get started with Plus500, you will need to meet a £100 minimum deposit. You can add funds via debit/credit cards, bank account transfers, and Paypal. Finally, Plus500 is a safe platform as it is authorized by the FCA in the UK and its parent company is publicly listed on the London Stock Exchange under the ticker symbol PLUS.

Stock Trading Fees 0% commission + spread
Deposit Fees No
Withdrawal Fees No
Inactivity Fees $10 (£7.60) per month after three months
Monthly Account Fees No

Sponsored ad. 72% of retail investors lose money trading CFDs at this site.

Research Rolls Royce Shares

Whether you’re investing in Rolls Royce or other companies like easyJet or AstraZeneca, it’s always important to do your research.

It is impossible to ignore the fact that the coronavirus crisis has severely impacted the Rolls-Royce share price. Hence, you need to perform some homework to determine whether it’s worth investing in Rolls Royce right now. Before you invest in stocks of this company, you should make a background research about Rolls Royce’s share price performance before and during the Covid-19 pandemic and its outlook for the future.

Rolls Royce Share Price History

Rolls Royce was founded 116 years ago in Manchester, Lancashire, England as a result of a partnership between Henry Royce and Charles Rolls. This partnership has created a new company: Rolls-Royce. While the company focused on manufacturing car engines in the first years of operation, it had an early foray into airplane engine production. Eventually, Rolls-Royce Holdings plc was incorporated in February 2011, and nowadays, it is the world’s second-largest maker of aircraft engines and the world’s 16th largest defense contractor. 

The share price has been on an upward trend ever since the company went public. However, the last two years have not been good ones for the Rolls Royce share price. Since 2018, the share price lost around 80% due to problems with the Trent 1,000 engine, Airbus A380 cancellation, Brexit, and the current Covid-19 pandemic.

Rolls Royce Stock Chart

Rolls Royce reached its all-time high of £1271 back in January 2014 but at the time of writing the share price is trading at £104.7, near its lowest level for more than a decade. On top of that, since so much of Rolls Royce’s business relies on the airline industry, it comes as no surprise that the share dropped almost 500p since the beginning of 2020.

Rolls Royce Shares Dividends Information

Rolls Royce typically pays two dividends per year (excluding specials), and the dividend cover is approximately 1.9. Overall, this company has a payment history of over ten years with an average annual yield of 3.2%. This, obviously, makes it an attractive share for some investors. It is also worth mentioning that in spite of the negative impact of the COV-19 pandemic on Rolls Royce, the company continues paying dividends to its shareholders.

Why do People Buy Rolls-Royce Shares?

Rolls Royce share price has been hit hard since it has adopted a new strategy in 2018. Additionally, the company was hit particularly hard due to problems with the Trent 1,000 engine, Brexit, and the global economic recession caused by the coronavirus pandemic. This adds further weight to the share, especially when you consider the shutoff of the airline industry.

Nevertheless, it’s not all dark for one of the largest companies traded on the London Stock Exchange. As such, below we list some of the reasons why people opt to invest in RR shares:

Diversification of Products and Services

Rolls Royce Holdings plc makes most of its revenues from civil airline carriers paying it for engine flying hours. But while the civil aerospace division is in a very uncertain condition, the defense business, which manufactures engines for military aircraft, helicopters, and nuclear submarines, has remained resilient.

According to some analysts, the value of Rolls Royce’s defense business should cover the company’s current market valuation. It is also worth mentioning that the company is under several military contracts that enable Rolls Royce’s defense division to perform well.

Then you have Rolls Royce nuclear division which is an integral part of the company’s future prospects. Rolls Royce has recently submitted a proposal to the British government to accelerate the building of a new fleet of mini nuclear reactors in the North of England.

A Key Player in the Aviation Industry with a Profitable Business Model

Rolls Royce has a significant market share in the aviation sector. As of 2020, it is the world’s second-largest maker of commercial aircraft engines after General Electric.

However, the company’s domination in the aviation sector is not the only reason why investors find Rolls Royce an appealing investment. The company operates a business model that guarantees constant cash flow. Basically, it develops engines, sells them to airlines, and signs up on long-term contracts to maintain, repair, and overhaul (MRO). Hence, when the economy is in growth mode, Rolls Royce is a highly profitable company.

Upside Potential is Available

While the majority of companies in the world saw valuations declines of between 30-50% since March 2020, Rolls Royce lost 66% in the year to date. The Covid-19 pandemic caused a huge problem for Rolls-Royce, and especially its civil aerospace division. As such, analysts have a mixed view on Rolls Royce.

Yet, its defense division makes Rolls Royce a functioning business and as soon as the airline industry gets back, Rolls Royce could benefit from renewed demand.

It is also worth mentioning that Rolls Royce plans a £1.5B share issue to bolster finances and strengthen its balance sheet amid the crisis in the aviation industry.

Open an Account and Deposit Funds

In order to start the process of buying shares of Rolls Royce Holdings plc, you’ll have to open an online stock trading account with a brokerage firm operating in the UK. We’ll walk you through the process, which can be completed fully online.

To get started, navigate to your chosen broker’s homepage and choose to sign up. You will then be prompted to complete a registration form where you need to provide your personal details such as username, email address, and then create a password.

If your chose broker is regulated in the United Kingdom by the FCA, it requires you to verify your identity before you can start trading. This means you’ll have to provide the following documentation:

  • Passport or Driver’s License
  • Recent Utility Bill or Bank Account Statement

Once verified, it’s time to deposit funds into your trading account.Your broker may require that you deposit a minimum amount, which you can do through one of these popular payment methods:

  • Debit Cards
  • Credit Cards
  • Paypal
  • Skrill
  • Neteller
  • UK Bank Transfer

Buy Rolls Royce Shares

Now you are ready to buy Rolls Royce shares. On your trading dashboard, enter Rolls Royce or RR.L in the search bar at the top of the screen in order to locate the share page.

This will bring you to an order box. Enter the amount of money that you wish to invest in Rolls Royce. The position size must meet your broker’s minimum investment amount. Once you ready to place an order in the market, click on the ‘Open Trade’ button, and your Rolls Royce share purchase will be completed.

Note: If you are buying Rolls Royce Holding plc shares outside of standard market hours (9.30 am to 5 pm, Eastern Standard Time), you will need to set an order for later Your Rolls Royce shares purchase will then be completed when the markets open.

Is It a Good Idea to Buy Rolls-Royce Shares?

Rolls Royce was hit extremely hard by the COVID-19 pandemic. When the airline industry shut down, orders for the company’s planes, parts, and designs were cancelled en masse.

However, the pandemic did little to disrupt Rolls Royce’s core business model. The company still has a highly profitable defense division and demand for its aircraft parts should bounce back once global travel resumes. Thanks to the rollout of vaccines from Pfizer and Moderna, it looks like a recovery within the airline industry will happen sooner than many experts initially predicted.

Moreover, Rolls Royce has done a nice job of looking to the future to ensure its business is healthy for decades to come. The move into nuclear power positions the company to ride the wave of demand for renewable energy, for example.

Rolls Royce shares remain 60% below the level at which they were trading prior to the pandemic. All in all, it’s important to do your own research and make sure you are following your own trading strategy.

The Verdict

Although many analysts were bearish about Rolls Royce over the past year, the COVID-19 pandemic has come to a close more quickly than many predicted. At the same time, Rolls Royce managed to get through the pandemic with relatively few disruptions to its core business model.

Shares are still down around 60% from their pre-pandemic price. According to Citigroup, Rolls Royce shares could have further upside potential, whilst Goldman Sachs analysts have set a price target of £573.

If you’d like to buy Rolls-Royce shares, you can do so using an FCA-regulated broker that provides these shares. It’s also a good idea to partner with a broker that offers FSCS protection. 

FAQs

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Tom Chen author check sign Pro Investor

Tom is an experienced financial analyst and a former grains derivatives day trader specializing in futures, commodities, forex, and cryptocurrency. He has over 10 years of experience in the Finance industry spanning across a day trader position at Futures First, and a web content editor and writer at FXEmpire. Tom is an expert in the areas of day trading and technical analysis as it applies to futures, cryptocurrencies, forex, and stocks. Tom’s primary interests include economics, trading, social-economic systems, technology, and politics. He has a B.A. in Economics and Management, a Journalism Feature Writing certificate from the London School of Journalism. Tom has written for various websites, such as FX Empire, The Motley Fool, InsideBitcoins, Yahoo Finance, and Learnbonds.

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