Evening star., 1948-12-26
High Yields Ignored
AS Investors Seek
To Protect Funds
By ChorIes F. Speore
North American Newspaper AlIions


NEW YORK, Dec. 25.-The COM
bination of higher dividends and
lower market prices in the last quar-
ter of 1948 has placed many stocks
of higher quality on per cent
yield basis.
Among them are such active
issues as AtchiSon common, ChryS-
Ter, General Motors common, Ken
necott Copper. United States. Steel
common. Norfolk and Western Rail
road. Socony- Vacuum, Standard Oil
New Jersey, Standard Oil of Cali
fornia and United Fruit.
The Standard Oil Companies have
just declared stock dividends which
materially lift the return on these
stocks to the holder. On this group
of 10 stocks, the average yield is
IT'S per cent at current prices. All
these companies are earning lib
eral margin over dividends paid and
are expected to maintain their pros
perity.
Utility Margins Smaller.
Listed public utilities do not show
a margin Of earnings to dividends
equal to those of the railroads and
industrialS. A majority are paying
out in dividends about all they can
afford. This is true of American
Telephone and Telegraph. Consoli
dated Edison of New York, Common
wealth Edison of Chicago. Detroit
Edison, Philadelphia Electric, Pacific
Gas and Electric, and Consolidated
Gas and Electric Of Baltimore.
There are dozens of stocks of
manufacturing companies which
also give a high return. They are
in the development class and their
dividend record covers period of
from 10 to Is years They grew
out of the inventions and discoveries
of the last war. Their financial
status and their prospects for con-
tinued good business, however, are
excellent.
In the early days of this century,
when business management was
less dependent than now on Gov
ernment regulation and on the de-
mands of labor, well-seasoned
common stock, on per cent yield
basis, was considered a likely in
vestment.
Today, however, investors are
cold toward many stocks of high
quality. earning well above the 6
per cent range. They appear to
be more concerned with protecting
their capital than il increasing
their income, in spite of the high
cost of living. Until the character
of domestic politics and the ten
sjons of foreign affairs lessen. this
is likely to be the attitude of in
dividual investors.
Rail Dividends Liberal.
In spite of a steady drain on
their earnings by successive wage
increases and rising costs Of ma
terials, the railroads this year have
been very good to their stock
holders. Among those that have
increased or resumed dividends are
the Atchison, Pennsylvania, New
York Central, Baltimore and Ohio,
Great Northern, Northern Pacific,
Burlington. Union Pacific, Southern
Pacific, Southern Railway, Read
ing, and Erie.
Total dividends this year by the
steam carriers should be between
s245, 100000 and S25OO00,000, COM
pared with S236, ,465 900 in 1947 when
payments were 30 per cent Of net
earnings as against 40 per cent in
the record year of 1929 Then they
were paid with a recklessness that,
subsequently. caused many of them
to be reduced or passed, and an
era of railroad receiverships was
entered from which the industry
has but recently begun to recover.
How long the industry can retain
its standing, while railroad labor
persists in its wage and rules de-
mands and the Interstate Com
merce Commission grudgingly
grants only small rate increases, |
is a question. Trucks and planes
are taking good revenue freight
from the steam carriers. which are
forced to spend hundreds of mil
lions of dollars for new passenger
equipment to maintain face" with
the travelling public on which 1t
loses money.
Mergers of the type long ago
recommended by the ICC and re-
iected by railroads might defer
future defaults and check a trend
toward decentralization