6 MAY 1938, Page 54


In these indeterminate conditions I do not feel justified in showing the green light to investors. Those who want equities should confine themselves to modest purchases of ordinary shares in stable companies, whose dividend record provides a , sound basis for long-term investment. If, as I imagine, the majority of the readers of these notes are still in a mood to concentrate on safety of capital rather than quick profits, they can achieve their object best in the prefer- ence field. This week I give a list of preference shares carrying tax-free dividends and offering less-tax yields between 4i and 6 per cent :

Guest, Keen & Netdefolds 5 p.c. Li Cum. Pref.

Henry Hope 51 p.c. Li Cum. Current Price.

30s. 6-d.

No. of times Yield.

dividend 00

covered. £ S. d.

10 4 10 6

Pref. .. 25s. 6d. 3 519 o Godfrey Phillips 6 p.c. Li " B " Cum. Pref. .

32S. 6d.


5 2 0

Lancashire Electric Light and Power 6 p.c. Cum. Li Pref. .. 36s. 9d. 21

4 IO 0

Madras Electric 51 p.c. Cum. Li Pref. ..

27S. 3d.

3 511 3 Upsons 6 p.c. Cum. Li Second Pref. 30s. 9d. 5f 5 7 9

The prices of these tax-free preferences have already been adjusted to the present rate of income tax, but on the theory that a further rise to 6s. in the k may yet have to be faced, I think there is a good case for purchasing this type of holding. On the broader subject of the desirability of holding fixed- interest securities I see nothing in this latest Budget to suggest any early movement in the direction of rising interest rates. On the contrary, the Chancellor's rigid adherence to orthodox principles must have been dictated at least in part by the Treasury's wish to maintain cheap money. and take advantage of a high level of gilt-edged prices.

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