Vodafone’s growth story makes it ‘attractive stock for income seekers’

21 July 2017

Vodafone has been labelled an “attractive stock for income seekers” considering its first quarter results published today.

Helal Miah, investment research analyst at The Share Centre, says: “Numbers released in Vodafone’s Q1 trading update this morning were encouraging which have helped the shares rise by roughly 2% at market open.”

He adds: “The good dividend yield should make this an attractive stock for income seekers willing to take on a low to medium level of risk and as a result, we continue to recommend Vodafone as a ‘buy’ for investors seeking income.”

At the time of writing, Vodafone’s share price stood at 227.45p while its dividend yield stood at 5.037%, according to Moneywise’s parent company Interactive Investor.

In June, the Share Centre also picked out Vodafone as a “buy” due its fast growth in the broadband sector  – although, Mr Miah has today warned that the company still has a long way to go. “Yes, Vodafone’s expansion into broadband is encouraging but investors should acknowledge that Vodafone does need to do more to offer quad play services and catch up with peers,” he explains.

Commenting on the news, Lee Wild, editor of Interactive Investor says: “The Vodafone story is all about growth and, while first-quarter results were hardly in knockout territory, a 2.2% increase in organic service revenue was better than expected.

“Even India, where a vicious price war is forcing Vodafone to merge its operations with rival Idea Cellular, has at least stabilised quarter-on-quarter.

“Management is certainly making all the right noises.  Boss Vittorio Colao talks of a ‘good start to the year’ and the outlook for the 12 months is unchanged.

“A surge in data traffic both in Europe and the Africa, Middle East, Asia Pacific is encouraging, and Vodafone’s cost savings programme is on track, too, crucial in an era of only modest top-line growth.

“A sharp acceleration in free cash flow following completion of the massive Project Spring investment programme, underpins both a significant forward dividend yield of 5.6% and the share price.”

For more on how to get started investing in company shares, read How to invest in shares and A beginner’s guide to investing in the stock market.

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