PREFERENCES . WITH ARREARS My correspondence shows that quite a number
of readers are attracted .towards • Preference shares in recovering companies whore there are still some arrears of dividends to be cleared off. The Appeal Of this'ti"ndlof share, which I have emphasised before, is: that the buyer has a chanCe not merely of receiving an exeelleni income yield but may also reap a _moderate, gain in capital value. 'The Australian iroup -is,• T. think, the richest field in this type of security. Most of the companies operating in Australia, whether pastoral or general merchanting and warehousing; were badly_ hit (hiring 111E. slump. ' Woifl and livestock prices Collapied, purchasing power dried up,. the Australian pound slumped and profits soon gave way to heavy losses. Thanks to the big rise in wool prices, the situation is
very different 'now, and although the exchange discount is still a drag on sterling profits, most of the companies have left losses fat-behind them and have made a beginning with paying off prefetence dividend arrears. - -
Australian-Estates, the old-established pastoral company, ,rs a case in point. Net profits rose last year from £49,48oiW £166,824, the debit carried forward on profit and loss -account has been extinguished, £15,000 put to reserve, and one yea, preference dividend -paid. This still leivet the 61 per cent £r cumulative preferences in arrears from June -36th, 1931, the equivalent of nearly 4s. net per share. At 23a. these preferences look very cheap.
Previous page
