WISE INVESTMENT

BROKERS report that clients, are showing a little more interest in investment matters, but _markets remain in the'doldiums.. " isl.D.C." is a thing Of the past, the gbld scare seems at any rate temporarily laid to rest; but last week-end anxiety regardipg the franc...ag_aiti assumed:sUllieiently large proportions to. affect the whole market.--in-my_Qpinion it will' be some time yet before one can 'say- with -confidenee -that the' tide hag turned,' for the genuine :investment buyer, whose support is needed to give hopes of a sustained revival,-is not likely to 1ae tempted back into the market at this time of the year " MOreciver;h1S conlidence has.. been .rudely shaken in the 'past three months, and will -neeci,restoring. • • ; - - - - This does not mean that I in any way doubt that recovery , . will come in due eciurse., -Fundarrientally,' the big factors: all reinain as `favourable .asthey ever were Trade is good,-and - the outloOklis 'good as far ahead one can See-;- costs' are , ribing:•but so, are 'Prices, and profit 'margins,' are -maintained irtclustrial..repOrti regidarly reveal higher earnings and many companies are paying larger dividends ; thus putchasing power is still rising,- .Whether its source is wages. or .dividends,,.and this Means both' sustained deinand for consumption goods and accumulating fUtids for investment. Undoubtedly, investors will`want higher returns than they accepted: even a few months agO-which is all to the good as share'Values, can now be seen, to have run too far ahead of trade and earnings—but if dis- crimination is exercised satisfactory yields can now be obtained without great difficulty or running undue risks.

• FOR TRUSTEES

All those who by profession or at the request of friends have accepted the responsibilities of trusteeship, are forcibly aware of the limitations of the Trustee List. -In the past few years scarcity of suitable outlets for money has forced all sound stocks to high levels, but the position is doubly worse for those whose choice is restricted to the narrow range of stocks permitted to trustees.

I hope that the following. list of three such stocks offering returns which in these times must be considered fair, if not definitely attractive, may be helpful. It will be seen that all three stocks are Home Rail Preference issues, and it must can- didly be admitted that they are by no means gilt-edged invest- ments. Nevertheless, in all cases the dividend now appears well secured, and, of course, the companies have had to main- tain some payment on their Ordinary stocks, in addition to the Preference dividends, throughout the depression to retain Trustee status. They are very suitable for raising the average return on a Trust investment list.

Price.

Yield per cent.

£ s. d.

G.W.R. 5 per cent. Pref. Stock

120

••

4 3_ 3

Southern 5 per cent. Pref. Stock ..

1181

4 4

0 Mersey Rly. 3 per cent. Pref. Stock ..

65

• 4 53 0

It will be noticed that the Great Western and Southern stocks stand, at substantial premiums. This, however, is of no great importance to the type of buyer I have in mind who is concerned only to purchase a regular and secure income. The relatively high return on the Mersey Preference stock is purely a result of its being less well known. Intrinsically it is as sound as either of the others.

* * * * - A SOUND CANADIAN UTILITY The Bell Telephone' system was one of the pioneers in its field. Bell Telephone Company of Canada, indeed, was formed as long ago as i88o, and then took over existing concerns. On the score of age alone, this company may claim to be one of the premier utility concerns in the world, and this claim is supported by a really excellent dividend record. From 1890 to 1931 stockholders received $8 every year without a break. Then the depression caused a lapse ; in 1932 the total payment was $7.25 and for:thelait four years has been $6.

The quarterly payment due on July 15th, however, has been raised to the old rate of $2,- and,I see every reason to expect that it will now be held at that level. Last year's net earnings were equal to $6.94 per share, and with the further improve- ment in. Canadian trade activity this year I imagine that current profits are rtinning at a rate exceeding. $8 per. annum. The Common shares are now quoted around $167 and- yield just over 4] per cent.

On this basis I commend them to the attention of investors seeking a first-class investment offering a reasonable return: For those- who are not resident in this country there is, of course, the additional attraction of the dividend being paid free of British income tax.

* * * * CABLE AND WIRELESS STOCKS - If it had not been for the adverse market conditions whic:i have obtained since the Cable and Wireless capital reconstruc- tion was announced, the combine's stocks would almost certainly have responded sharply to the improvement in their position brought about by the scheme and the more favourable outlook for the group which has been disclosed. As it is, quotations for the junior stocks are weaker and for the 51 per cent. Preference practically unchanged.

As is well known, the combine proved to have been formed at an inauspicious moment. Owing to a variety of difficulties, it has so far been unable to show more than the slenderest earnings on its original capital. Some of these difficulties remain, particularly subsidised competition fioui Governmental wireless systems, although, as far as systems within the Empire are concerned, it is understood that negotiations now proceeding promise some amelioration of the position. The biggest factor in the poor results so far reported, however, has been the economic depression, for the- volume ofmessages sent over the combine's system shows a striking correlation with the volume of international trade,•and it is, of course, in just this branch of the economic organism that recovery has been most tardy: Hence, with the improvement now taking place, a considerable advance in the company's revenues can be expected.

* * * * The reconstruction scheme provides for the elimination of Preference dividend arrears, by the issue to holders of £7 6s. 9d. of new 4 per cent. Income stock for each £zoo of their holding, and the reduction and consolidation into one class of the existing "A" and " B " stocks. The Preference stock is now quoted at 112, but as the new Income stock may reasonably be valued at par, the equivalent ek arrears price is ro4ff, giving a yield of 51 per Cent. The directors have foreshadowed a dividend of 4 per cent. on the new Ordinary stock, so the Preference dividend will be well covered, and the yield seems to me to be attractive._ The "A" stock at 25 and the " B " stock at 6t are equivalent to the new stock at 831, giving a yield of 41 per cent. on a 4 per cent. dividend. This stock has prospects of considerable apprecia- tion with further recovery in international trade.

• * * Venturers' Corner There are two schools of thought in the market regarding Richard Thomas and Company Ordinary shares. The point at issue boils down to this : the company has a £7,500,000 new works scheme in hand on the old Ebbw Vale property, and while the sceptics assert that the boom will be ended before this scheme can be completed and so its earning power may not be fully employed for years, the optimists argue that the resulting improvement to the company's competitive power will enable it to weather whatever storms may be ahead of us.

For myself, I am with the optimists. I vin assured that the new plant is definitely in front of any owned by com- petitors, and shareholders need have no qualms about the magnitude of the scheme. Over a period, therefore, as the plant justifies itself, I look for appreciation, and meanwhile the 6s. 8d. shares at 14s. give the very satisfactory return of over 7 per cent. on, the dividend of. 15 per cent. just declared.

CURATOR.

[Readers' enquiries, or requests for advice, regarding particular shares will be answered periodically as space permits. Corre- spondents who do not desire their names to appear should appeni initials or a pseudonym to their questions.]