Vodafone Group Plc (ADR) (VOD) Is Still a Dividend Heavyweight Buy

Sucker punch
Finally, Woodford is worried that cash flow cover for the dividend has fallen to “uncomfortably low levels.”

To be fair, that worries me too.

Full-year results show free cash flow falling 8.1% to 5.6 billion pounds. Yes, you read that right: 5.6 billion [punds. That’s an awful lot of cash flow.

Vodafone Group Plc (ADR) (NASDAQ:VOD) still churns out money. Management recently proposed a final dividend of 6.92 pence per share, giving a total dividend of 10.19 pence per share, a rise of 7%. Which wasn’t bad for a company that is supposed to be on the ropes.

I accept the dividend may come under pressure, but with the yield topping 5% it is still 50% higher than the FTSE 100 average of 3.6%.

Forecast earnings-per-share growth of 4% to March 2014 and 7% to March 2015 also look pretty solid, leaving Vodafone on a modest 12.3 times earnings, just below the FTSE 100 index average of 12.75 times.

Clearly, some people still want to own Vodafone Group Plc (ADR) (NASDAQ:VOD). And I’m one of them. So is Citigroup, which has just reiterated its buy recommendation, with a target price of 2.15 pounds.

For long-term dividend glory, Vodafone looks like a contender to me.

The article Come Off It, Neil: Vodafone Is Still a Dividend Heavyweight Buy originally appeared on Fool.com and is written by Harvey Jones.

Harvey Jones owns shares of Vodafone. The Motley Fool recommends Vodafone.

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