Is Vodafone Group plc A Better Dividend Stock Than National Grid plc, Unilever plc, HSBC Holdings plc And Royal Mail PLC After Vodafone India Merger Update?

Does Vodafone Group plc (LON:VOD) (LSE:VOD.L) have brighter dividend prospects than National Grid plc (LON:NG) (LSE:NG.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), HSBC Holdings plc (LON:HSBA) (LSE:HSBA.L) and Royal Mail PLC (LON:RMG) (LSE:RMG.L)?

Vodafone Group plc
Vodafone Group plc

Vodafone Group plc (LON:VOD) (LSE:VOD.L) has released an update to the stock market today concerning shares in Vodafone India. The company says it notes the recent media speculation regarding a potential combination of Vodafone India and Idea Cellular.

Vodafone is in talks with the Aditya Birla Group about an all share merger of Vodafone India and Idea Cellular. Any merger would be undertaken via the issue of new shares in Idea Cellular to Vodafone, and would have the end result of Vodafone deconsolidating Vodafone India. There is no certainty any transaction between the two stocks will be agreed, nor as to the terms or timing of any investment transaction.

Vodafone shares have gained 2.8% so far today following the news. In my view, it has improved investor confidence in the company’s shares and this may continue if a deal between the two stocks is completed.

In my opinion, Vodafone’s long term dividend appeal remains high whether the deal is completed or not. I feel it has a sound strategy which should give investors’ confidence in the stock’s future direction. Its investment in the products and services offered alongside investment in infrastructure could help it to remain relevant in what is an increasingly competitive TMT space, where the difference between technology, telecom and media companies is arguably becoming less obvious.

Vodafone shares yield 6.4%, which is a similar level to other dividend shares such as National Grid plc (LON:NG) (LSE:NG.L), Unilever plc (LON:ULVR) (LSE:ULVR.L), HSBC Holdings plc (LON:HSBA) (LSE:HSBA.L) and Royal Mail PLC (LON:RMG) (LSE:RMG.L). HSBC’s stock yields 5.9%, Unilever’s shares yield 3.5%, National Grid’s stock yields 4.9% and Royal Mail’s dividend yield is 5.8%.

I think Vodafone will remain relatively appealing as a dividend investment in the long run. I believe it offers growth from the investment made in its offering together with some stability from the nature of the industry in which it operates. Therefore, while using a CFD or spread betting account may not be an option for me, I’m more focused on the company’s long term dividend potential.




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