BRITISH INDUSTRIAL YIELDS Last week I expressed the view that
leading American equity shares were better value for money than most British industrials ; in the meantime Wall Street has rallied roughly 20 per cent. and the discrepancy has been wiped out. In- vestors who are still looking for yields plus a chance of capital appreciation might study the following list : Associated Portland Cement John Brown (tos.) Dunlop Godfrey Phillips Shell Transport Staveley Coal ..
United Steel ..
• • • • • • • - • •
Current Price. 901- 33/3 341- 4619
58/3 29/9 Current Dividend.
22i 25 tax free
9 II 20 tax free 12 tax free 81
Yield.
5.o 6.o
5.4 5.6 5.3 5.5 5.7 These are all ordinary shares, carrying with them the risks and the favourable possibilities of the businesses concerned. All are quoted very substantially below the high levels touched earlier this year—not in itself a good reason for buying— and all are now offering a yield of 5 per cent. or more on the latest dividend rates: Is 5 per cent. enough in relation, first, to the yield obtainable on safety-first fixed interest investments, and, second, to the earnings prospects of the companies themselves ? Well, long-dated gilt-edged stocks return only a meagre 31 per cent. and I do not think this level is going to alter very much, except very gradually, for a long time to come. That leaves a spread of I1 per cent. or more in favour of the industrial ordinaries. As for prospects, I shall be disappointed if the average earnings and dividends of the list of companies I have chosen do not increase over the next two years. Long-range prophecy is difficult in these days, but the scales are surely tipped in favour of continued pro- sperity rather than a serious slump.
Previous page
