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Why I Love Owning Shares in Vodafone Group

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LONDON -- Vodafone (LSE: VOD  ) (NASDAQ: VOD  ) has had a great start to 2013. Since the New Year, the shares have risen 12.4%. In that time, the FTSE 100 is up "just" 7.2%. So far, I have made a return of 8.1%. Vodafone will be paying its shareholders a dividend of 3.27 pence per share on Feb. 6. If the share price were to remain unchanged, this payment will push my return on the shares up to 10.1%.

I bought my shares after Vodafone announced its interim results in November 2012. The market was disappointed with the headline figures, and the shares fell to their lowest price in more than two years.

At that point, I reckoned that Vodafone was too cheap to resist.

Vodafone is one of the U.K.'s blue-chip titans. In 2012, the company paid out more cash to shareholders through dividends than any other company in the FTSE 100. It has been increasing its dividend year-in, year-out for more than 10 years. Vodafone is one of the most respected income shares on the market today. It is a cornerstone holding of many investors' high-yield portfolios.

Despite all of Vodafone's success and strength, the shares are not expensive. They currently trade on a P/E ratio for the year of 11.3. The average for a FTSE 100 share is 16.4. I expect that Vodafone shares will yield 5.6% for 2013.

Shares in Vodafone have been rising recently. I think that there are three reasons for this. First, the market as a whole has done well. This has led to more people investing in shares and naturally some of that money has gone into Vodafone stock. Secondly, Vodafone has been buying back its own shares. Finally, the market seems to be waking up to the value in Vodafone's stake in U.S. mobile operator Verizon Wireless.

I expect that these factors will continue to push the shares higher -- I am very happy to hold.

Owning high-yield shares like Vodafone means that even if share prices fall, fresh money is coming into your portfolio. Fund manager Neil Woodford is a master of dividend investing. Woodford spent more than 20 years forging his reputation as a top investor. To help you learn from Woodford's methods, we have prepared a special free report detailing some of his latest selections. "8 Shares Held By Britain's Super Investor" is an entirely free report that will be delivered to your inbox immediately. Simply click here to get the report today and see which shares this top stock-picker has been accumulating.


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10/26/2016 4:00 PM
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