How Vodafone Group Plc (ADR) (VOD) Will Deliver Its Dividend

Summing up
Vodafone’s new dividend policy is considerably more cautious than its previous policy, but this is not surprising given the prevailing cash flow situation. At the moment, I find it difficult to see Vodafone increasing its dividend in the coming year — and, in theory, holding the dividend at the current level indefinitely would constitute a successful delivery of the policy!

At the time of writing, Vodafone Group Plc (ADR) (NASDAQ:VOD)’s shares are trading at 197 pence. Therefore, a 10.19 pence dividend offers anyone investing in the company today a 5.2% starting income, which is well above the interest you can earn on cash. However, we should note that if Vodafone fails to increase the dividend, or only delivers increases below the level of inflation, the real value of that starting income would be eroded.

There are other companies around, offering a similar high yield to Vodafone, but with policies of increasing their dividend at least in line with inflation.

The article How Vodafone Group (LSE:VOD) Will Deliver Its Dividend originally appeared on Fool.com.

G. A. Chester has no position in any stocks mentioned. The Motley Fool recommends Vodafone.

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