Investment Notes
By CUSTOS
Titt,: equity markets have quietened down, but are still very sensitive to political news. As I remarked last week, if the Labour Party comes into power a complete reappraisal of investment portfolios will be required. Already the insurance and property share markets have been discount- ing a Labour victory—insurance shares perhaps fully, but property shares not sufficiently. One brOker points out that Mr. Wilson's intention to use investment allowances selectively implies that they will no longer be given for domestic equip- ment-rental and entertainment companies. There has already been a sharp setback in the television rental shares. These brokers add that Mr. Wil- son's discrimination might even extend to holi- day camp shares, where the low dividend cover also makes them vulnerable.
Brewery Shares
It seems to me that brewery shares are as defen- sive a group as it is possible to find in these pre- election markets. They offer comparatively high dividend yields of over 4 per cent and ade- quate dividend covers of one and a half times to two. They did not share in the market boom at the end of last year and no one has said that Mr. Wilson intends to increase the beer tax. The biggest brewery group in the country is ALLIED BREWERIES (Ind Coope Tetley, AnseIls and Friary Meux). It owns 8,500 public houses and hotels out of a total of 72,000. It has a turnover of no less than £133 million, of which Grants (wines and spirits) account for £35 million. Modernisation is still proceeding and Mr. Thompson states that sales for the first six- teen weeks of the current year have shown a useful increase. At 15s. 11d. the shares yield 4.2 per cent on the 13 per cent dividend covered 1.6 times.
Plessey and Elliott-Automation The companies which Mr. Wilson wilt favohr are those engaged in electronics and automa- tion. ELLIOTT-AtrromATION is outstanding and as 1 write the new shares can be obtained free of stamp at 44s. to yield 2.2 per cent. This may be -considered high enough, but messuv at 82s. 6d., to yield 2.3 per cent, is perhaps more attractive. This company is the largest group in the telecommunications industry in this country and stands to gain a major share of the business arising from the huge Post Office investment pro= gramme. Its prospects overseas are also excellent. Exports of telecommunication products are run- ning at record levels and it is expected that in- creased trading profits will accrue through the reorganisation of the group's overseas interests. (The company has acquired Ducon Industries, an Australian company concerned in the manufac- ture of electronic components and high-voltage Power equipment.) For.the current year to June, 1964, another record year's trading is fore- shadowed and a scrip issue is confidently expected in the market.
Tobacco Shares
Once again BRIJ 1St I AMERICAN TOBACCO (ex- porters and overseas manufacturers) has been able to report a rise in its pre-tax profits and to raise the dividend from the equivalent of I s.,10.4d. tax-free to 2s. 0.64. tax-free. How long this company will be able to go achieving growth when the doctors of 'the world seem to be more and more against it is anyone's guess. IMPERIAL TonAcco has also reported higher pre-tax profits and declared the same dividend. Investors who are nervous of tobacco shares and are reluctant to lose the high income might consider the holding-investment company—TOBACCO SECURI- 'I 1ES num.—whose Ordinary and Deferred shares yield 7.3 per cent and 6.5 per cent respectively. 'This holding group still has plenty of rich assets
hidden in its balance sheet. ,
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