Investment Notes
By CUSTOS
MR. WILSON'S speech at Swansea was too much for the nerves of the private investor, who, on the first day of the new account, stepped up the 'small' selling which he began nearly three weeks ago. The party image which Mr. Wilson is building up is still unfortunately a frightening one for the average investor. His promise that there will be no statutory limitation of dividends does nothing to soften the blow that there will be higher taxation of distributed profits, not to mention a fiercer capital gains tax. The average institution has not been a seller, but has been putting its new money wisely into dollar equities. (The GENERAL MOIORS placing has been Oppor- tune.) This, coupled with the business demand for investment dollars, which the Treasury allows, is responsible for the rise in the dollar investment premium from 101 to 14 per cent.
General Motors and Ford
A secondary issue of four million shares of GENERAL MOTORS IS being placed and, as the coming tax reduction in the US will help the motor industry as much as any, a purchase of General Motors and/or FORDS might be con- sidered by the British investor who is scared of the coming election. Here are the present yields and earnings cover.
General ord Motors
New York price .. 51i 77f London price (including premium) 104 155
Estimated earnings, 1963 .. ..
4.50 5.45 Dividend .. .. 2.00 4.00
Dividend yield
' • , 3.9% 5.1%
The lower yield on Ford is justified by the fact that while the GM current dividend was not covered by average earnings of $3.96 over the past five years, the Ford dividend is covered over twice by average earnings of $4.12. How- ever, the record results just announced by GM will probably turn investors in their favour.
Mettoy
By contrast with the unfortunate LINES BROTHERS, the record of METTOY, the old-estab- lished manufacturer of pressure die-cast toys, plastic toys and soft vinyl figures and play balls, is outstanding. Over a quarter of a million children now belong to the Corgi Club, which keeps its members informed of the latest scale models. The company's Playcraft series combine model railway sets, toy telephones, typewriters and construction sets, etc. The equity shares were introduced to the Stock Exchange in June last year and the prospectus revealed that profits had multiplied eight times in the five years to December, 1962. In the current year profits are said to be running about 20 per cent higher. At 25s. 6d. the 5s. shares return an earnings yield of over 10 per cent and a dividend yield of around 3 per cent. But the 15 per cent dividend may well be increased.
New Issue
The largest and best known of the insurance brokers is C. T. BOWRING, which is placing 25 per cent of its 'A' shares this week at 19s., to yield 4.3 per cent on dividends and 8+ per cent on earnings. Four-fifths of its profits come from in- surance broking and the balance from shipping, trading and two insurance subsidiaries. If the shares open in a bad market at a small discount they should be worth picking up for investment, but do not expect much capital appreciation in the near term.
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