LONDON — One of Warren Buffett‘s famous investing sayings is “be fearful when others are greedy and greedy when others are fearful” — or, in other words, sell when others are buying and buy when they’re selling.
But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.
So, in this series of articles, we’re going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.
The share price of telecoms giant Vodafone Group plc (LON:VOD) hasn’t had a bad year so far. Despite some up and downs — and the downs have been quite large at times, with an 8% slide over the course of 10 days in February, prompted by city super-investor Neil Woodford selling his Invesco Perpetual High Income fund’s holdings in the company — it’s up almost 22% in 2013.
Indeed, anyone who bought at the bottom of the post-Woodford-sell-off trough has enjoyed a near 18% rise in the value of their investment in just four months, and even those who bought just before the slide have seen their stake rise by almost 9%. And there are clearly people who think Vodafone Group plc (LON:VOD) is still worth buying, since it was in the No. 3 position in our latest ‘Top Ten Buys’ list.*
One of Vodafone Group plc (LON:VOD)’s big attractions as an investment has long been its dividend. While its share price may have risen just over 25% in the past five years, comfortably beating the FTSE 100‘s meagre 10%, it’s also paid out a handsome dividend of 5% or more each year over the same period, and has increased the pay-out by 7% every year over the last four. If reinvested, those dividends would have appreciably enhanced the value of a shareholding in Vodafone.
However, in its final results for the year ended March 31, 2013, Vodafone Group plc (LON:VOD) quietly slipped in a change to its dividend policy. After four straight years of at least 7% increases in its pay-out, the board announced that it now only “aims at least to maintain the ordinary dividend per share at current levels.” That might well give income-seeking investors pause for thought, although even under the new policy the forward yield is around 5.3%, which is well above the FTSE 100 average.
Perhaps something other than the dividend attracted the attention of last week’s buyers? Well, there are the “it’s on, it’s off, it’s on again” rumors about Verizon Communications Inc. (NYSE:VZ) buying out Vodafone Group plc (LON:VOD)’s 45% stake in Verizon Communications Inc. (NYSE:VZ) Wireless. That could provide Vodafone’s with a massive windfall of 60 billion pounds or more — that’s around two-thirds of its current market cap.