Vodafone’s dividend is its thorn and its jewel
Investors buy and sell Vodafone based on the health of its dividend. With a yield of more than 9%, surely there are nice returns to be made even if the pay-out is trimmed?
Telecommunications is a service which many of us would struggle to live without. A utility which is used by roughly 63% of the world’s population. Vodafone (LON: VOD) connects almost 500m of those mobile users, many of them in the emerging markets. It makes more than €40bn a year from repeated, reliable service revenue. Maintaining sales requires little operating expenditure meaning the group is able to convert huge amounts of its profits into cash and is therefore a generous dividend payer. Vodafone cash and profits 2014 to 2018 2014 (£bn)2015 (£bn)2016 (€bn)2017 (€bn)2018 (€bn)Operating Profits(3.91)1.971.323.734.30Net Profits59.45.92(5.12)(6.08)2.78Operating Cash Flow6.239.7210.514.213.6Free Cash Flow4.411.091.274.065.42Those are…