Investment Notes
By CUSTOS
TNVESTMENT practice is simple enough if you 'keep to a few rigid rules. Confine your basic portfolio to the equities of the leading companies in basic industries like chemicals (ICI being the 'star' turn) and in the consumer trades and ser- vices. Long-term growth for these is guaranteed by every government in a Welfare State. Avoid the cyclical trades-motors, household durables, etc.-which are the victims partly of clumsy government attempts to 'stabilise' the economy through the use of hire-purchase controls, partly of changes in consumer tastes and technological design. The shares of the leaders in the con- sumer trades and services, on the other hand, arc still in a long-term bull market and can be bought in the reactionary phases which are seen in the market from time to time. Such a reaction- ary phase may now be starting. The shares to watch are first, the leading stores, whose recent reports have shown that the expansion of retail trade is still in full swing. I like DEBENHAMS (yielding over 4 per cent. and `cum' the one-for- ten bonus), UNITED DRAPERY (yielding nearly 4 per cent.), MONTAGUE BURTON (potential yield 4.6 per cent.), WOOLWORTH (yielding 3 per cent.) and, of course, MARKS AND SPENCER for those who can afford them. Secondly, the consumer- goods manufacturers, such as RECKER* AND COLMAN (current yield 2.9 per cent.), RANKS (5.0 per cent.), CEREBOS (2.9 per cent.), SCHWEPPES (3.6 per cent.), DISTILLERS (3.4 per cent.) and select breweries, such as ANSELLS and MITCHELLS AND BUTLERS. All these shares could safely be bought on further falls in the market. Finally, the banking services. Banks flourish in a trade boom with dear money. I have previously recommended LLOYDS, now yielding 3.3 per cent. at 71s. 6d., because of its substantial hire- purchase interests.
Ansells Brewery
Next month the final dividend will be declared by ANSELLS BREWERY for the year ending Sep- tember, and if I am not mistaken it will be at least II per cent. and possibly 12 per cent. The interim dividend was maintained at 6 per cent. on capital increased by the one-for-five scrip issue made in February last. At 86s. the £1 shares would return nearly 4 per cent. on 17 per cent. or 4.2 per cent. on 18 per cent. Dividends have been increased six times in the last ten years and there have been three bonus issues. The last dividend was covered over twice by earnings. This large brewery group operates mainly in the Midlands and South Wales and has reciprocal trading agreements with other brewery companies, notably MITCHELLS AND BUTLERS, with whom it runs a joint com- pany to build licensed houses in the Midlands selling both companies' products. It would not be surprising if Mitchells and Butlers eventually makes a bid to take over Ansells entirely. I have previously recommended both shares both for income and for capital appreciation.
Selecting Capital Goods
All rigid investment rules must have their exceptions and I would include in a basic port- folio such capital goods shares as LONDON BRICK (yield 3.4 per cent.), ASSOCIATED PORTLAND CEMENT (yield 3.1 per cent.) and the steels which are not closely limited with the motor trades, such as UNITED STEEL (yield 3.8 per cent.), LANCASHIRE STEEL (yield 3.5 per cent.) and FIRTH AND JOHN BROWN (yield 3.6 per cent.). After recent falls of 12 per cent. to 16 per cent. se16I Tho steel shares seem attractive with higher' dltit. dends to come. With these I would inch° WALLPAPER MANUFACTURERS, whose results were recently published (yield ex3c.3eliPerleri. cent.). In choosing capital goods shares the investor should not forget UNITED DOMINIO.° TRUST, the leading hire-purchase company which finances the buyers of industrial plant (current yield only 2.7 per cent.), and MERCANTILE CRE1111,; which has fallen about 20 per cent. and is 11°'' returning 3.1 per cent.
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