Vodafone pays more than dividends

I recommended Vodafone to readers at 170p in March 2012. My basis was that the shares were undervalued and that Vodafone paid good and consistent dividends over 5%. The announcement recently that they are selling their stake in Verizon for $130bn one of the largest sales in history has now put this advice into perspective. Even without the buyout readers would have gained not only 22% increase in price but also several dividends over 5%. Readers who took my advice are now sitting on shares worth 209p with the following to look forward to when the transaction completes in 2014:-

Mr Colao called the special payout, which equates to 112p per share, a reward “for the long term support of our strategy since our initial investment [in the US]”.

He said that retail investors – many of whom retain shares from Vodafone’s privatisation in the 1980s – could choose whether they want to receive the payout in Verizon shares or cash.

The one-off dividend will be paid when the transaction completes in the first quarter of 2014.

Mr Colao had other good news for shareholders yesterday, promising an 8pc increase in the annual dividend next year with further rises after that.

He also confirmed that the deal will not be subject it to any UK tax, and is only liable for one payment of less than $5bn in the US. The Verizon Wireless stake is held by a Dutch subsidiary, and Vodafone will benefit from a tax exemption on disposals in Dutch legislation.