Investment Notes
HOTEL SHARES.
r a few exceptions, I scarcely think that the ordinary shares of Hotel Companies can properly be included in an investment list, and my only reason for referring to them at this time is that many of the shares have been advancing of late in anticipation of exceptionally good revenues next year by reason of the number of visitors to London expected in connexion with the Coronation. That these expectations may be fulfilled seems probable enough, but from the investor's point of view the possibility of exceptionally good receipts over a brief period scarcely seems sufficient justification for attracting the money of the genuine investor.
On the other hand, so far as the prospects of early capital appreciation are concerned, it is perhaps reasonable to expect that some recovery may take place inasmuch as Stock Exchange operators, as distinct from the investor, are always on the lookout for influences calculated to bring about a rise in shares, even for a brief period.
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FREDERICK HOTEL PREFERENCE.
On this principle I am inclined to think that the 54 per cent. Cumulative Preference shares of the Frederick Hotels Limited may perhaps offer a reasonable chance of appreciation. The group is a soundly established one and a few years ago was paying good dividends on the Ordinary shares. Nothing has been paid on these Ordinary shares for about five years, and the interest on the 54 per cent. Cumulative Preference shares is also about four and a half years in arrears. For last year, however, the position showed considerable improve- ment and the Directors were able to recommend a dividend of 2f per cent. on the Preference shares, bringing the payment up to December 31st, 1931. Moreover, at the Annual Meeting the Chairman stated that the current financial year had commenced well' with the improvement of the previous year well maintained. These Preference shares of £1 each have accordingly recovered to nearly par, and having regard to the fact that the accrued interest is so considerable, it would not be surprising if in common with other Hotel shares there were to be some appreciation in the near future. As recently as 1929 the Company was paying dividends of 15 per cent. on the Ordinary shares after meeting the 54 per cent. interest on the Preference shares. For the last four years, however, the Company has been working at a loss, after allowing for the interest due, but not paid, on the Preference shares..
On the basis of last year's distribution the yield at the present price is of course onlyabout 21 per cent.,but the full resumption of the dividend would make a full 54 per cent. yield, while pay- ment of the arrears would be the equivalent of the deduction of about 4s. from the present price of 20s.
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PROFITS FROM BRICKS.
Although the profits of Eastwoods Brick ManuiVi4urers were about £9,000 less than last year at 1/01,663, the profit- earning power of the business is well maintained and in their report the Directors state that, while seasonal conditions adversely affected development during the latter part of the year, the sales turnover for the current period is in excess of all previous figures. The Directors repeat the final dividend at 10 per cent., thus maintaining a total - payment for the year of 15 per cent., less tax. A further sum of £22,500 is also added to the Reserve. The £1 shares now stand at 54s., at which the return to the investor is just over 54 per cent.
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