C.P.R. PREFERENCE POSITION
There is cause for fresh hope in the breasts of Canadian Pacific Railway preference stockholders in the latest earnings figures. For the first six months of 1939 gross receipts have risen by 520,000 dollars, while the rise in net receipts is as much as 2,670,000 dollars. This is good going even allowing for the influence on gross receipts of the Royal visit in May, and for the fact that the second quarter corn- parison of expenditure is affected by the wage restoration of April, 1938. There is ample evidence that there has been a really worth-while reduction in expenditure and a genuine improvement in gross receipts which has continued into July. If one could take the first half-year's results as a reliable guide to the outcome of the full year's working it would be possible to look for a resumption of preference dividends with a payment of anything from 2 to the maximum 4 per cent. There are one or two qualifications, however, which dictate caution. In the first place, litigation is now in train regarding the company's guarantee of " Soo " Line bond interest on which payments ended just over a year ago; then there is the question of ancillary income and special charges quite apart from any charges against revenue arising out of retirement of properties from service. Even allowing for these-possible checks on the year's net results, I feel that given a reasonably good wheat harvest stockholders may look for a substantial improvement in the net revenue available for dividends. At £21 C.P.R. preference stock, which is quoted per Do° of stock, should therefore prove a worth-while purchase. The 4 per cent. debenture stock, with its interest well covered, can be bought around £62 to yield nearly 61 per cent.
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