The company’s annual report provides concise highlights of where the business is and where it’s going. Group revenue fell 4.2% while data revenue increased 7.5%. Adjusted operating profit was up 3.7% to 12 billion euros and free cash flow was 5.6 billion euros. Adjusted EPS were up 5%.
The sale of its Verizon Wireless stake back to Verizon (VZ) for $130 billion, of which $58.9 billion is in cash, merely provides Vodafone with even more cash on its balance sheet to pay its dividend — not that it needed it. Dividends have long been manageable under free cash flow, and cash on hand — which was $86 billion in March — is far above that now.
I compare the company to AT&T because Vodafone’s 400 million worldwide customers create the aforementioned massive free cash flow for the company, which is paid out to investors in the form of a 4.3% yield. This is a dividend stock worth owning.