Investment Notes
By CUSTOS
IT goes without saying that the investor nnist play for safety this year. As a start he should take up a reasonable amount of dated gilt-edged stocks. If he is due fo retire in a few years he has a wonderful opportunity in Savings 3 per cent., 1955-65, at 90-1, which will be repaid at 100 in under three years and eight months. The running yield is low-3.3 per cent.—bUt if You gross up the tax-free capital profit the true Yield to redemption is 7.4 per cent. Then there is Savings 2-1 per cent., 1964-67, which becomes a 'short' in May and is bound to move to a higher basis. The running yield is again low— just under 3 per cent..----but the true 'gross' yield is 7.1 per cent. If you want a higher running Yield, take Exchequer 51 per cent., 1966, which at 98-it gives 5.6 per cent. And for a longer date. Conversion 5 per cent., 1971, at 901 to yield 54 per cent. running: This is repaid at par in nine years six and a half months and gives a true gross yield to redemption of 6.95 per cent.
Discount Companies .
The discount companies had a bad time when Bank rate was suddenly raised to 7 per cent. on. July 26 and few had sufficient internal re- serves to meet the depreciation on their bonds. But the worst is now over and the prospect of a return to a 5 per cent. Bank rate in the next six to eight weeks should bring some buyers into this neglected share market. It would be wise perhaps to avoid the companies which end their financial year at this time—in case their reports arc too bad—but those accounting in March or April might be bought for income and later capital appreciation.. For example. ALLEN HARVEY AND ROSS at 55s. to yield 5.45 Per cent.
'Safe' Equities
. While the shares of banks, insurance, property, brewery and consumer goods and services rank as non-cyclical, and therefore as relatively safe, equities, I cannot bring myself to recommend them as a whole at current market prices, which appear to be high enough. There are, of course, alwaYs exceptions, and I am inclined to put forwaixt HUGON as one, the price ,being 75s. 6d. (against a high Of 83s.). to yield close on 5 Per cent. on the new annual dividend rate of 181 per cent. This Manchester company makes the Atora beef suet and controls two other com- panies in the same line of business. The last report was the best it has had and reflected the efficiency gain from concentrating its suet pro- duction in an improved Manchester factory-- the one at St. Albans having been closed down
and sold. In May last a bonus issue of one new Share for every three was made and if the re- ports of good trading this. year are confirmed the final dividend to be declared early in March might be more than.the assumed In per cent.
Recovery Shares
On the assumption that Mr. Lloyd will still try to check consumption but revive investment, some steel shares might be bought for recovery. JOHN summeas is in the lighter end of the in- dustry (i.e., sheets) and last year suffered only a 7 per cent. decline in trading profits. But its shares have fallen by about 37 per cent. and at 43s. 6d. yield 6.8 per cent. Its capital pro- gramme, designed to diversify its output with heavier steel products, should enable it to benefit from any increase in investment. Another re- euvery stock is WIDISH MOTOR at I5s. 9d. to yield 6.2 per cent.
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