Why Vodafone Group plc Will Be One Of 2013’s Winners

With their shares up nearly 50% since the start of January to 226p, a 6.9p-per-share final dividend for the year ending May 2013 already in the bag, and an interim dividend still to come, there’s no denying it’s been a winning year for Vodafone Group (LSE: VOD) (NASDAQ: VOD.US) shareholders so far.

And it’s not hard to see why.

Pretty decent results

At full-year results time on 21 May, Vodafone reported a small fall in revenue for the year to 31 March, but adjusted organic operating profit was up 9.3%, adjusted earnings per share (EPS) rose 5% to 15.65p, and the full-year dividend was lifted 7% to 10.19p per share.

Based on the previous night’s closing share price of 197.6p, that dividend represented a yield of 5.2%, which was way above the FTSE average of around 3%.

Since then we’ve had a first-quarter update for the current financial year which was a bit mixed — reported revenue improved by 5.2%, but on an organic basis we saw a 0.8% fall, with the countries of Southern Europe still suffering after the eurozone disaster. But chief executive Vittorio Colao told us that “growth in emerging markets has accelerated, we now have over 5 million customers benefiting from Vodafone Red, and 4G is live in ten markets“.

Vodafone has also completed its takeover of Kabel Deutschland and now holds 76.6% of its share capital, opening up a market of 15.3 million potential new customers for its broadband-inclusive packages.

The big sale

That progress alone would be impressive, but I’ve still left out the year’s big deal — the disposal of Vodafone’s 45% stake in Verizon Wireless, which was confirmed in September.

The sale to Verizon Communications for a total consideration of $130bn was a great deal for shareholders, who are set to receive an $84bn windfall as a result — cash and a bunch of Verizon shares, worth a total of 112p per share, are heading their way.

The Verizon sale had, of course, been anticipated for quite some time, with various games of brinkmanship between the two companies having previously played themselves out.

Back in May, before the eventual deal rumours started to emerge, I was confident that Vodafone’s management was savvy enough to get a good deal for shareholders and for the Fool’s Beginners’ Portfolio. And I’m quite pleased to have been right about that, not long after investing guru Neil Woodford had sold his Vodafone stake.

Some dividend uncertainty

There has been one notable bit of perhaps-negative news, with Vodafone downgrading its dividend policy such that it only “aims at least to maintain the ordinary dividend per share at current levels“.

But while that might have disappointed those who wanted maximum dividend increases in the relatively short term, it does offer the company more flexibility in its still-growing business — and I think we’ll still see reasonable rises and attractive yields in the years ahead.

Overall, then, 2013 has been a kind year for Vodafone, and I’ll join its shareholders in toasting their success.

And finally...

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> Alan does not own any shares mentioned in this article.  The Motley Fool has recommended shares in Vodafone.