SOME HIGH YIELDS
As usually happens in the early stages of a recovery movement, buying in the past fortnight has been concen- trated largely on the better-known shares. In consequenc, the gap between the yields on gilt-edged and on the leading speculative issues, abnormally wide a few weeks ago, has been considerably reduced. At the same time, the gap has widened between yields on the leading speculative issues and on lesser-known shares which have not yet been caught up in the rise. Here is a selection of the type of share I have in mind: —
Current Yield.
Price. s. d.
Hugh Stevenson (Boxmakers) 13$. 4d.
Participating Preferred Ordinary 17s.' od. to 3 0 Paterson, Laing and Bruce (Australian merchanting) 6 per cent. Cumulative £i First Preference 13s. od. 9 5 o Debenhams (Stores) 7 per cent. los Cumulative Third Preference 9s. od. 7 16 o Neuchatel Asphalte (Roadmakers) Li Ordinary 6s. 8d. 7 to 0 Cook, Son (St. Paul's) (Textile and Ware- housing) 7 per cent. Li Cumulative
Preference 16s. 3d. ... 8 12 0 Ragusa Asphalt Paving los. Ordinary 185. od. ... 9 15 0 In all these cases quotations have risen very little from the depression levels of a month or two ago, and yields are correspondingly high. Obviously, none of these shares is a gilt-edged holding—returns of 72 to 10 per cent. are themselves an indication of risk—but in my view the risks are very adequately allowed for in the price. In other words, if the Stock Exchange recovery proves to be soundly based on an improvement in trade, the dividends on this type of share, which might be jeopardised by a trade recession, should be maintained and the margin of cover strengthened. On that assumption the price should gradually improve to bring down the yield into closer relation with the earnings position.
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