Do these three things make Vodafone Group Plc (LON:VOD) a good investment?
There are things to love and loathe about most companies. Today, I'm going to tell you about three things to love about FTSE 100 (UKX) mobile giant Vodafone (LSE: VOD) (NASDAQ: VOD.US).
I'll also be asking whether these positive factors make Vodafone a good investment today.
Verizon Wireless
Verizon Wireless is the biggest mobile group in the United States and Vodafone is in the enviable position of owning a 45% share of it. The US company's revenues are actually bigger than Vodafone's own.
There are two reasons why potential investors in Vodafone should love Verizon Wireless. First, the US group has taken to paying out huge dividends in the past couple of years: $18.5 billion to date, of which Vodafone's cut has been $8.3 billion. Second, Vodafone's stake in Verizon Wireless is reckoned to be worth as much as $100 billion.
Dividend yield
Leaving aside the possibility of occasional special dividends -- taken from the Verizon Wireless payout -- Vodafone's ordinary dividend offers the highest yield of any mega cap in the top third of the FTSE 100.
At a share price of 164p, the dividend for the year to March 2013, based on Vodafone's guidance, gives a very nice yield of 6.2%.
Sterling
Despite being a global giant, Vodafone hasn't gone down the path of some companies of switching the currency it reports, and declares its dividends, in from GB pounds to US dollars.
With Vodafone, if you're a UK investor seeking a reasonably predictable income, you aren't subject to the vagaries of currency exchange rates that can boost or cut your dividends willy-nilly from one year to the next.
A good investment?
Vodafone's shares are currently out of favour with the market, having fallen from a 52-week high of over 190p last August to 164p today; the FTSE 100, meanwhile, has been marching steadily upwards.
Unloved shares can often make good long-term investments. If I were in the market for a high-income mega-cap share, then Vodafone, with its standout yield of 6.2% -- and a below-market-average forward price-to-earnings ratio of 10.7 -- would certainly be high on my list of shares to consider.
One investor with a proven track record of buying great dividend shares with steady growth potential is ace City fund manager Neil Woodford. Woodford's £20 billion funds have thrashed the FTSE 100 over the past five, 10 and 15 years.
You can now learn all about this master investor's methods -- and eight of his current favourite blue chips -- in a free and exclusive Motley Fool report. This report is available to private investors for a limited time only, but you can download it right now: simply click here.
> G A Chester does not own shares in Vodafone. The Motley Fool has recommended shares in Vodafone.
