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LAST week I gave a brief resume of the unexpectedly good results achieved by the leading English railway companies for the first half of the current year, and it may now, perhaps, be useful briefly to com- ment upon the relation of those results to the yield to investors in railway stocks at their present level of prices.
Since the dividends were announced there has been a rally in several instances, and, of course, it remains to -be seen what results will be achieved for the second half of the year. Even on the present basis of divi- dends, English railway stocks now stand at a level giving a very substantial yield to the investor. The following table of a few representative Ordinary or Preferred Ordinary stocks shows prices at the time of writing as compared with the highest and lowest of the past nineteen months, and it will be seen that notwithstanding the improved results for the past half year, present quotations are still low :—
Highest and lowest since Jan., 1928. Price on Highest Lowest Aug. 6.
1031 771 86 761 471.. 521 441 211 26 171 91 111 791 684 711 40 27 • • 28
INVESTMENT YIELDS.
Connecting present prices with the recent declarations, it may be noted that in the case of the London Midland and Scottish Railway, for example, the final dividend for last year was 2i per cent., and on fairly conservative estimates—always assuming there are no important industrial disturbances—it looks as though in the coming year it might be as high as 3 per cent., in which case the distribution would be 5 per cent. for the year, giving a yield to the investor, on the basis of the present price, of over 91 per cent. Even when the dividend a year or so ago was on a 4t per cent. basis, the price stood at about 71. In the case of the Southern Railway, the yield is also a good one at around 7 per cent., while assuming—and the assumption seems to be a reasonable one—that at the end of the year a 2 per cent, distribution on the deferred is maintained, the yield on that stock would also be about 7 per cent. The Great Western outlook is also an encouraging one, the results for the past half year justifying hopes, if not expectations, that the dividend for the whole year might come out at about 7 per cent., in which case the yield on the stock would. then be well over 8 per cent. The London and North Eastern stocks, even some of the preference issues, come into the more speculative category, but it is perhaps worth noting that at present prices the first preference and the 5 per cent, redeemable preference give a running yield to the investor of about £5 17s. 6d. and f.5 17s. per cent. respectively, while in the latter instance, if allowance is made for redemption, the yield is over
Great Western Ord. .. L.M. & S. Ord.
L. & N.E. Pref. Ord. ..
Dfd. . Southern Pref. Ord. ..
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