10 DECEMBER 1937, Page 46


It is odd that the demand for prior charges so frequently passes over the home railway m'arket. The reason is presumably that these stocks have never quite recovered investment status 'after the buffetting they received in the 1930-32 slump period. The yields offered, however, are tempting in relation to the cover offorded, even on the basis of last year's net revenues. London Midland and Scottish 4 per cent. First preference, for example, can be bought at 82 to yield £4 as. 9d. per cent. and the 1923 preference at 71 gives a return. of £5 14$. In the first case the inargin of net revenue last year, after meeting the dividend, was roughly £2,800,000, while the cover behind the 1923 preference, calculated on the same footing, was Li,19o,o00.

It will be very surprising indeed if the L.M.S. net revenue for 1937 does not show an increase of at least £1,006,000.

A more border-line stock is the 4 per. cent. First preferente of the London-and North-Eastern, which gives a full 6 percent. at the current price of 68. The margin of cover shown in the 1936 figures was £330,000 but this year's figures should add at least another £1,900,000, the net revenue up to June 30th having risen by £770,000. Since then there has been a further increase in gross receipts of roughly £900,000, and the trend of traffics is still upward. There is good value for money in all these three stocks for investors seeking a reasonably high income yield.