Dividend limitation
Sir: In the final analysis the value of any share must reflect the expected future dividends receivable thereon.
Thus, if gilt-edged are yielding 14 per cent per annum the only reason why an ordinary share should yield one tenth of that figure is that there is some expectation of material increases of dividend in the future.
But are such expectations justified? Remember that Dividend Limitation was imposed by a (so-called) Conservative government. Can a Labour government allow itself to appear more indulgen.t than the Tories towards shareholders?
But furthermore, if and when Mr Heath once more takes the helm (which God forbid) will he be less eager to placate the trades unions than heretofore? Is he not likely to continue his policy of bullying the helpless, friendless shareholders because he knows that they have no one to turn to and no power to take industrial action?
When the grim prospects become apparent to investors in general there could be a further precipitous drop in share values which might irrevocably impair London's standing as a world financial centre.
R. E. G. Simmerson 10 St Andrews Mansions, St Andrews Road, London, W14
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