PROSPECTIVE YIELDS
If these estimates are realised—and I do not see why they should prove unduly optimistic—yields on what may be called the border-line stocks will be pretty generous at current prices. L.M.S. 1923 preference, at 411, will give a return of over 9 per cent., L.N.E.R. First Preference will yield to per cent. at 35, Southern preferred at 651 will give just over 71 per cent. and Great Western ordinary, at 32, just under 8 per cent. Obviously, all these stocks could rise considerably in a favourable market environment pro- vided there is no really dismaying increase on the expendi- ture side. At the moment the wages situation is not very (Continued on page 200)
FINANCE AND INVESTMENT
(Continued from page 199)
happy and I feel that it would be prudent to assume that a fair slice of the net revenue rise in 1940 will go to the railway workers. Current prices and yields are already adjusted to some increase in costs and I see no reason why the railway stockholder should not see things through. As a speculation on trade recovery L.N.E.R. First Preference, around the current level of 33, looks a reasonable proposi- tion. Even assuming the N.U.R. succeed in getting a good slice of what they are asking, I think it is safe to budget on at least 2 to 24 per cent. on this stock. The yield therefore would not be ungenerous.
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