Will one of the FTSE 100’s most reliable income stocks maintain its dividend? Vodafone investors eye payout as earnings set to fall
Vodafone’s shares are at their lowest level since the early 2000s, despite the vaccine boost, as the company is weighed down by debt and fierce competition in Europe.
But in a year when income from stocks has tumbled, the telecoms group is still seen as one of the FTSE 100’s most reliable dividend-payers.
Following a cut in 2019 – the first time in the firm’s history – investors will be on the lookout for assurances that Vodafone will keep payments up when it releases its half-year results on Monday.
They will also expect a further update on the float of the towers portfolio – with clues on whether this could release cash in the future.
The merger of Virgin Media and O2, and sale of TalkTalk to private equity, has also left some in the City questioning whether Vodafone needs to join the party to protect market share, not least because trading is less than impressive.
Expect to see a fall in revenues over the half as the collapse in tourism means people are saving money on roaming charges, which is only partly offset by greater mobile phone use while they are stuck at home.
Overall, analysts predict that full-year earnings will be down 8 per cent to €14.3billion.
The company’s ability to afford dividends will also be affected by the cost of expanding infrastructure and stripping out Huawei equipment from its European networks.
The Share Centre said: ‘At times when dividends are slim, Vodafone will be looked at as a good option.’