INVESTMENT NOTES
By CUSTOS
T is not yet time to back the gilt-edged market I up to the hilt but surtax payers should keep an eye on Funding 3 per cent. 1966-68 which can be bought at 82i to yield 3.65 per cent. flat, 54 per cent. to gross redemption and no less than 6.3 per cent. to true gross redemption (grossing up the tax-free capital gain). That £1,000 invested in this stock should become £1,206 in eight years' time is a point worth remembering by the family man. Even if Bank rate is raised to 6 per cent. the temporary setback would not be very damaging. (When Bank rate was 7 per cent. in September, 1957, the stock fell to 774.) Savings 24 per cent. 1964-67 is equally good, but at 814 offers a running yield of only 3.05 per cent. In a year's time it becomes technically a 'short.' The gross redemp- tion yield is 5.67 per cent., and true gross redemp- tion 6.4 per cent. £1,000 invested in it today becomes £1,222 in seven years' time, excluding interest as before.
4 per cent. on 'Growth' Shares In this reactionary phase in the equity share markets some attractive yields are being thrown up. Over 4 per cent. for 'growth' stocks would
have been considered a bargain six months ago. PRESSED STEEL have come back nearly 10s. on the new issue and on some disappointment over the results for 1959. Gross profits were tip by only 9 per cent. (net profits by 22 per cent.) and equity earnings (through debenture conversions) up by only 7 points to 90 per cent. The dividend has been increased from 25 per cent. to 30 per cent. and at 36s. the 5s. shares yield 4.2 per cent. Development plans will add about a third to its body-building plant and as its chief customers are BMC and Rootes (others being Jaguar, Rover, Rolls-Royce and Standard) Pressed Steel must be regarded mainly as a motor component share with refrigerators as a subsidiary. TIMES FUR- NISHING 5s. shares have fallen from 19s. 3d. to 15s. 9d. and at this level yield 4.2 per cent. on the dividend of .134 per cent. The last report, showing earnings of 164 per cent., revealed that unrealised profit on hire-purchase trading, which could be realised over the next two years, amounted to an additional 20 per cent.
Finally, HOOVER 'A' 5s. shares have fallen 10s. to 45s. 6d. and yield 4.9 per cent. This company's current year may be one of consolida- tion, but its growth has been outstanding-since 1945 equity earnings have risen by 33 per cent. per annum compound-and it is still expanding. Incidentally, watch ICI-the shares may yield very close to 4 per cent. before long-and the steel shares which have come back in anticipation of the Richard Thomas and Baldwins issue (now postponed to June, it is thought). Yields of 4.6 per cent. can be obtained from STEEL OF WALES, 4.5 per cent. from STEWARTS AND LLOYDS, and 4 Pa cent. from COLVILLES.
From 44 to 6 per cent. with Doubtful `Grovflhi Where the market is not quite sure of manage' ment or growth much higher yields can be secured. The prime example is DUNLOP, which 053 forgivably cut its dividend in 1956. The 199 report was good, with sales up 7 per cent., tradolgi profits up 14 per cent. and equity earnings uP • per cent. The dividend was raised from 13 Per cent. to 15 per cent. (covered 24 times) and ' 25s. 6d. c.d. the yield is no, less than 6 per cent, VINE PRODUCTS also had an excellent report MD, net profits 50 per cent. higher and the divider'', raised from 25 per cent. to 271 per cent. (covered 24 times). Here there has been quarrelling on the board, followed by a new chairman and manageg director. The new board seems technically ver9 able and with good trade ahead for the company's : fruit juices and British wines the 5s. shares 31 24s. should be cheap to yield 5.9 per cent. Finally' the cable manufacturers have been suffering 1'1 two years from overcapacity and price-cutting. by prices are now stable and there are signs of 0'14 improvement. The giant of the industry, BlIC hai just reported higher profits-thanks to its reeen, acquisitions-and has maintained its dividend at 131 per cent. (covered just over twice). At 56s. 3cli the shares yield 4.6 per cent. But AEI, the not, largest in the cable industry, return the ontc higher yield of 5.7 per cent. The shares have fallen from 66s. 6d. to 51s. 9d. and like Dunlop anl/e3r to be getting unpopular in the market place.
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