Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-04-16
STOCK DIVIDENDS
MAY Be COSTLY
All Right During Prosperity, but
What About Lean Years?
Asks Banker
Stock dividends we're being discu ssed

stock dividends were being discussed.
A broker remarked that. since the
Supreme Court decision that such divi-
dends should not bo taxed, almost 1000
per cent has been declared in stock divi-
dends by various corporations, and that
another crop Of them might be expected
soon. ..
He said he believed more Importance
was being attached to these dividends
than they were entitled to. There is
another side to the matter. he said
which he believed, was being largely
overlooked
In the end. he remarked. the stock
dividend is not going to help the stock
holder. as far as he can see. The con.
Germs distributing these stock dividends.
he said. are making great profits. many
Of them are making them as a result Of
the unusual business conditions in their
particular lines. But the distribution
Of these dividends calls for more earn
ings to be set aside on account of the
Increase In capital stock.
This may be ro great hardship in
times like the present, but there
into consideration. The amount of
earnings which would take care Of the
dividends under the old capitalization
he said, might fall far short of provid :
ing dividends under the new capitaliza :
ton which would include the new stock
issued as dividends and. in any case, Il
would mean cut in dividends.
Another broker said the above. while
quite true, applies to any increase 10
| capital stock, whether in the form Of
dividends or not, and he did not see
that the argument would have any
weight with the man who buys certain
stocks on the probability of an early
stock dividend, and. he added, that
class Of men are most numerous in
the market today, In fact, it might be
said they are making the market, as
the greatest activity Is among the stocks
Of that class.
| the announcement of stock dividends
! by Woolworth Co. and the American
Tobacco Co., coupled with the rumor
Of 100 per cent stock dividend by the
Pan American Petroleum Co.
A representative of a bond and in
vestment institution said that his ex-
perience was that investors were in a
waiting frame of mind, that is, waiting
for the next new issue to yield Z or
~ per cent or better. He said he
found little or no interest among his
clients for the "old stuff" and it is
impossible to interest any one in any
thing yielding less than Z per cent.
Quite the contrary was the story told
by partner Of an old established bond
and brokerage concern.
He said he was doing very salts
factory business in old established
seasoned bonds. The prices which these
bonds command now, he said, promise
a yield almost as good as the new is
sues, and the security back of them is
very much better. He said in saying
so he meant no reflection on any Of the
recent new issues, most Of which he
considered very safe, but, he said, ii
seemed to him as though many cor
porations had put up as collateral
everything that was possible, so that
there is no margin left for additional
financing should it become necessary.
While there is crop Of new inves =
tors who do not discriminate in their
examination Of investments to find out
IL they comply with the fixed rule,
for safety Of principal, permanence oI