INVESTMENT TEST FOR INDUSTRIALS Until recovery in America looks more
assured, I am not prepared to change my ground in the matter of general invest- ment policy. To the speculatively-minded I repeat : Hold off ; and to those who are not looking for quick capital profits : Consider your purchases from the standpoint of long-term investments. Last week I suggested that home industrial ordinary shares should now be judged in relation not merely to their immediate prospects, but to the average dividends paid over several years. It is precisely this view which is behind the formation of the new investment trusts which are prepared to support the home industrial market at present prices. British industry, it is argued, should still be able to look forward to reasonably prosperous times, partly on the basis of rearmament and cheap money, and partly because the Government has further cards up its sleeve—such as road construction—whenever the current high level of activity should begin to wane.
Well, which are the shares which satisfy this new invest- ment test ? My list is not exhaustive, but it includes Imperial Chemicals, Imperial Tobacco, Harrods, Shell Transport, Staveley Coal, Stanton Iron, Paton and Baldwins, and United Dairies. In all these cases the yield on the average dividend of the past five years is 4 per cent. or more, and the return on the probable dividend for the current year is over 44 per cent. One must, of course, not overlook any secular changes which may affect any company's position adversely, and in all the cases I have instanced the factors influencing the outlook appear reasonably favourable. This is the kind of industrial ordinary share which, held as long-term investments, should not bring investors to any great harm.