As I detailed in a recent article, I like looking for dividend catalysts as a way to drive stock performance in my Special Situations portfolio. And I think we have a great opportunity for that in shares of Vodafone (Nasdaq: VOD).

Vodafone currently offers a 4.7% yield, a solid dividend from a telecom blue chip. But it looks as if there's plenty of room for upside on that dividend, which should drive the stock higher. The company pays out 55% of its free cash flow, but just 39% of its net income. In this case, that net income better measures the company's profitability. Vodafone consolidates income from its 45% stake in Verizon Wireless, but doesn't actually receive cash from the joint venture with Verizon (NYSE: VZ). That could be about to change.

Verizon Wireless has nearly paid down its debt, meaning the JV can pay out dividends to its co-owners. Many have speculated that Verizon needs the cash for the buildout of operations in the U.S., and therefore would have the venture turn on the dividend spigot. This potential has hedge fund investor David Einhorn intrigued. Einhorn is also interested in Sprint Nextel (NYSE: S), to the point of actually purchasing nearly 2% of its shares late last year.

Other analysts have speculated that Verizon would buy Vodafone's stake, a distinct possibility given that the U.K. giant wants to clean up its investment portfolio. Still others figure that a merger between Verizon and Vodafone could be in the works.

If Verizon Wireless did pay dividends, it would significantly increase what Vodafone could then pass comfortably on to its own shareholders. At a 6.4 EV/EBITDA multiple, shares of Vodafone are valued more highly than peers Verizon at 5.6 and AT&T (NYSE: T) at 6.2. But it also offers growth in emerging markets such as India.

Even better, Vodafone provides a better long-term play on high-yield telecom dividends than fading wireline plays such as Frontier Communications (NYSE: FTR), CenturyLink (NYSE: CTL), and Windstream (Nasdaq: WIN). While these latter players pay from 7% on up right now, Vodafone has the potential to grow its 4.7% at a nice clip. And with its exposure to emerging markets, its business should have more room to run than these wireline players.

Still, with current yields on Frontier at quite high levels and not too far up on 52-week lows, it might be more interesting to have both Vodafone and Frontier in your portfolio, which is what I've done.

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Jim Royal, Ph.D., owns shares in Frontier and Vodafone. AT&T and Vodafone is a Motley Fool Inside Value recommendation. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.