My correspondence shows that quite a number of people are
still nervous about their holdings in London Transport " C r stock, although the price has now fallen to 78 from too earlier in the year. Frankly, I cannot think that the stock is attractive even at today's price. For the year ended June 30th, 1937, there was a gross -traffic increase of £255,1oo, or= roughly
per cent,: against which costs almost certainly rose by at least-the same amount. Assuming, therefore, as I fear one must, that the board continues the renewals allocation policy which it has found imperative so far, I cannot see how the dividend can be larger than 4 per cent. In the current financial year traffics have again increased only very modestly and there seems to be little to hope for in any relief from increased fares. • My own inclination, as a holder of Transport " C " stock, would be to sell at 78 and renvest the proceeds in London, Midland and Scottish 1923 Preference, now standing at 76. The 4 per cent. dividend on this stock is now covered by a very substantial margin of revenue and, given a continuance of good trade, the net revenue next year should be higher than in 1937. There is, of course, no chance of a higher dividend than the fixed 4 per cent., but the yield of £5 6s. per cent. is decidedly attractive in the light of the security offered. On the basis of the 1936 net revenue the 4 per cent. dividend was covered by a margin of £r,ioo,000. This • year the margin should be over £1,5oo,000.
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