INVESTMENT NOTES
By CUSTOS
rri HE start of a new account—and of a new I financial year for some Stock Exchange firm! —brought no fresh buying to the equity shall markets. 'Waiting for Godot'—meaning Mr Amory's Budget—is the order of the financial day. Nevertheless, with the Financial Times in• dustrial share index now yielding 4.1 per cent after its fall, and with the vast majority of corn• pang reports over the next few months likely tc bring news of higher equity earnings and divi. dends, I think the market is getting more firmly based. There are now many good shares giving yields, after dividend increases, of 4 per cent, to 4i per cent. I call attention to two: ARMY ANC NAVY have just reported a 38 per cent. rise in profits (far better than those of LEWIS'S and DAMAGES) and have raised the dividend from 111 per cent. to 15 per cent. (covered 1.3 times) This Victoria Street store, which will benefit from the vast rebuilding schemes in that neighbour- hood, has flourishing subsidiary stores, notably William Harvey of Guildford. The 10s. shares at 32s. 6d. (against a high of 38s. when there was talk of a take-over) yield 4} per cent. Secondly, LAMSON INDUSTRIES, a well-managed company producing a wide range of business equipment— stationery, punched cards, calculating machines, etc.—with subsidiaries in packaging (making printed paper and bags) and in engineering (industrial heating equipment, etc.). The trading recovery from the recession was satisfactory, for in the year to December, 1959, net profits rose by 17 per cent. and the dividend was raised from 10 per cent. to 12 per cent. covered just over twice. At 12s. the 5s. shares return 4.8 per cent. and on that account are likely to be more stable than, say, ICT, yielding only 3 per cent.
Tube Investments on the Fall Few 'blue chips' have fallen so heavily as Time INVESTMENTS. Before being quoted 'ex' the one- for-one bonus the shares had fallen by nearly 20 per cent. to 112s. 9d. At the beginning of This week the shares were marking at 65s. for the old and 40s. premium for the new issued at 25s. On this basis the yield is 3.8 per cent. on the 'not less than 121 per cent.' promised by the directors. This is attractive for an expanding. well-diversified
and well-managed company which gives the British investor his only chance of participating in the development of the aluminium industry through its subsidiary the toi iner British Alumin- ium, accounting for over 60 per cent. of the aluminium-fabricating capacity in this country. Apart from aluminium the group covers steel production, steel tubes, specialised engineering, electrical goods (including the Creda domestic appliances), bicycles, road signs and a host of special products. The company thus offers the investor a wide spread over the capital and con- sumer goods trades. It is usually right to pick up the new shares of a 'blue chip' after such a heavy fall, occasioned by such a huge issue (£.21 million).
Gold Shares
The heavy selling from- the Continent, which caused a substantial fall in gold shares over the past few weeks, seems to have dried up, and at present prices some attractive yields can be obtained. A harmless South. African budget has been presented and some commentators have suggested that gold shares are now a good hedge against a possible fall in our own industrial equities following a bad British Budget. But I doubt whether this is a valid argument. Few investors would run away from a British industrial to seek safety in the explosive African continent. My advice is to keep away from the actual gold- mining companies and confine attention to the finance companies which spread their risks be- tween gold, base metals and industrial enterprises and look like giving higher dividends in the reasonably near future. I have previously recom- mended CONSOLIDATED GOLDFIELDS, whose shares have come down from 99s. 3d. to 82s. 6d. I think the next year's distribution will be 5s. 6d. (against 5s.) per share, which would give a yield of 6.65 per cent. In May the ANGLO-AMERICAN will present its report for the year to December and I think the final will be increased, making 10s. for the year. At just under £10 the 10s. shares would then be returning over 5 per cent. (against the present 4 per cent.). Its junior partner RAND SELECTION declares an interim in June for the year to Sep- tember, and the year's distribution might be brought up to 3s. 3d., so that at 61s. 3d. the 5s. shares would return 5.3 per cent. Consolidated Goldfields look outstandingly cheap. The interim dividend will be declared in June.
Previous page
