Company dividend announcements have to be quite exceptional in these
days to excite much enthusiasm in Throgmorton Street, and even Burmah Oil's 5o per cent. scrip bonus has proved rather a damp squib. Burmah Oil was my choice a year ago in the oil market, and my expectations have been handsomely fulfilled. Profits, which are arrived at very conservatively, have risen from £3,488,035 to £4,162,285, or by roughly 20 per cent., and after placing an extra £500,000 to reserve, which receives an allocation of £960,513, the board has raised the cash dividend for 1937 from 271 to 3o per cent. That is excellent in itself, but does not complete the story. By revaluing its substantial direct and indirect holdings in Angto-Iranian ordinary stock Burmah is to capitalise a sum of £4,578,838 and allot r new ordinary Et unit to existing holders for every 2 now held. Unless earnings improve, it would probably be unwise to expect a higher dividend than 20 per cent. for 1938 on the larger amount of capital, which is equivalent—and no more than equivalent—to last year's 3o per cent. But there is something to be said for the optimists. First, a conservative board, such ,as that of Burmah Oil, does not distribute a big scrip bonus if it sees a slump round the corner ; second, the £5,300,000 ordinary stockholding in Anglo-Iranian is still carried in Burmah's books only at its par value, whereas it is worth. roughly £27,000,000 at today's market price which, in turn, is a measure of its earning power. Until American business begins to lift its head, I should advise investors to delay purchases in the oil market. As soon as this pre- requisite is fulfilled, their first choice should be Burmah units.
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