GREAT WESTERN DIVIDEND
First among the railways to give us its 1939 figures, the Great Western has fulfilled our highest hopes. In, the eight months up to the outbreak of war gross receipts from rail- way and ancillary business rose by about £1,180,000 and net receipts by about £870,000 above the total for the corre- sponding period of 1938. For the whole of last year net revenue, which, of course, included an estimated sum for the September-October period under the new financial agreement, amounted to £6,607,000, an increase over .1938 of £1,554,000. Deduct the balance on all the pre-ordinary stocks and there is a balance of £1,617,000, equivalent to just under 4 per cent. on the consolidated ordinary stock, out of which a dividend of 31 per cent. is being paid.
These are encouraging results although they do not pro- vide any reliable guidance as to the possibilities for 1940. For one thing, the Great Western probably suffered least from the abnormal influences which affected railway working at so many points last year. What really matters in forming any worth-while estimate of the value of Great Western ordinary stock now is the level at which the pooled net revenue is running. My guess is that it is approaching what is termed "Stage 2," i.e., the stage beyond which the Govern- ment begins to come in as a profit-sharer. In other words, the indicated earnings on Great Western ordinary for 1940 are about 41 per cent., while the guaranteed minimum under the financial scheme is 3.3 per cent. Quoted at 48 the stock yields about 61 per cent. on the minimum and over 9 per cent. on this year's indicated earnings. In my view there is scope here, in reasonably favourable conditions, for a further rise.
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