RHODESIA RAILWAYS TRUST Whatever views one may hold about the
probable or the desirable price for copper, it seems safe to budget on a steady expansion in output. The Rhodesian producers can turn out copper at extremely low costs and so long as their capacity is not fully extended one may be sure that increasing require- ments will be met out of rising output rather than at rapidly mounting prices at the expense of retaining adequate stocks. While, therefore, I would not dissuade a speculatively minded investor from buying producers' shares, such as Rhodesian Selection Trust or Rhokana, I think there is just as sound a case, and less risk, in taking a hand through the carrying companies.
The Li ordinary shares of the Rhodesia Railways Trust are attractive from this point of view at 28s. 6d. This trust controls the Rhodesia Railways company which has a long- tetm agreement with the mines and which has recently con- solidated its capital structure. For 1936-37 the trust will probably have to go without a dividend from the railways because of the necessity for building up their statutory minimum reserve, but this should not interfere with the maintenance of the trust's dividend at 5 per cent. tax free. The railways' earnings are increasing rapidly and for 1937-38 it may easily be practicable to raise the dividend substantially, thus opening up the prospect of' a higher payment on the trust's ordinary shares. 'At 28s. 6d. the yield on the current rate of 5 per cent. tax free is 41 per cent. gross.
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