Vodafone to Receive 2.4 Billion Pound Dividend Windfall

LONDON -- The shares of Vodafone (ISE: VOD.L) (NAS: VOD) slipped 4% to 161 pence in London trade this morning after the telecom group issued mixed interim results and said it would spend a forthcoming dividend from Verizon Wireless on a share buyback.

The FTSE 100 member admitted its first-half performance had been "slightly below" its expectations, with group revenue down 7% to 21.8 billion pounds and adjusted profit up 2% to 6.2 billion pounds.

Vittorio Colao, Vodafone's chief executive, said: "We have continued to make progress on our strategic priorities over the last six months, with good growth in data and emerging markets in particular. In the short-term, however, our results reflect tougher market conditions, mainly in Southern Europe."

Today's figures included a 6 billion pound write-off relating to the group's Spanish and Italian operations.

The statement also revealed the forthcoming receipt of a 2.4 billion pound dividend from Verizon Wireless. However, Vodafone added that it would use 1.5 billion pounds from the proceeds on a share buyback program.

The decision to spend the upcoming Verizon payment on buybacks contrasts a previous decision to distribute an earlier windfall. When Vodafone received a 2.9 billion pound payout from its 45% stake in the U.S. mobile operator during January, some 2 billion pounds was distributed to ordinary shareholders through a special dividend.

Today's Vodafone results indicated that full-year profit would be a bit higher than expected at close to 11.9 billion pounds, while free cash flow would be a bit lower than expected at about 5.3 billion pounds.

The interim dividend was lifted 7.2% to 3.27 pence per share, and Vodafone confirmed its target of lifting the current-year payout by at least 7%. That should mean that the full-year dividend will be 10.2 pence per share, which would support a potential 6.3% yield for today's buyers.

Right now, Vodafone is just one of a number of FTSE large caps that offers a dividend income well ahead of what you can expect to receive from a standard savings account. If you are seeking other high-dividend possibilities, this special free report reviews the favorite income stocks held by Neil Woodford -- the City fund manager who thrashed the FTSE 100 during the 15 years to 2011 by favoring dividend-paying blue chips. Just click here to download these Neil Woodford share ideas today. But do hurry, as this report will remain free for a limited time only.

The article Vodafone to Receive 2.4 Billion Pound Dividend Windfall originally appeared on Fool.com.

Maynard does not own any share mentioned in this article.Motley Fool newsletter services have recommended buying shares of Vodafone. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.