Friday, 16 November 2012

New Purchase - Vodafone

The stock has dropped over 16% since it’s high of $30.07 on August 8th.

My purchases:

June 30th, 2011                     100            $26.47
August 20th, 2012                 100            $29.53
November 16th, 2012            100            $25.20

My total cost for 300 shares is 8,119.85 USD (8,104.53 CAN), or 27.07 USD per share.

In 2012, I received $46.36 and $99.08 in dividends for 100 shares, as well as a special dividend of $62.11 (total = 207.55 USD). That was a yield of 5.49%, 7.84% if I include the special dividend.

The upcoming February 6th dividend is 0.327GBP per ADR, or approximately
0.5093 USD:

            (0.327 GBP * 1.5883 USD) - 0.01 USD ADR Charge = 0.5093 USD

Compared to last years 0.4636 USD, that’s a 9.9% increase. That’s right - because of favourable exchange rate, those that have ADRs get a higher increase in their dividend! The actual exchange rate will most likely be determined in January, so the numbers will change slightly.

I feel that Vodafone is a shareholder friendly company and is currently unloved. The latest results were below expectations and so far, there will be no special dividend paid to shareholders; this presents a good opportunity to buy. I’m comfortable with Vodafone as long as they don’t start borrowing money to pay the dividend.

If the final dividend is increased at the same rate as the interim dividend, I calculate a 2013 yearly dividend of about 1.59 USD. That’s a yield of 5.87% on my average cost of $27.07 per ADR. And a yield of 6.29% on Friday’s closing price!


  1. Great buy. I picked up 100 shares last week and it seems I should have waited for an even better price. I will be watching shares for further weakness and may add more shares to average down. You have to love their high yield.

    1. I like your put on VOD. I'll be able to start buying puts in a week or so. There are many good deals this week and possibly more to come next week. I'll be looking to selling puts on stocks like INTC, NSC, WAG, CSX, MCD and VOD. With markets on the way down, selling puts is very appealing.

    2. For all of the puts I wrote this year, I will just have my second stock, intc, put to me on Monday. All of the other trades just paid me to wait. This was in a rising market of course. I will probably get a lot more stocks put to me if we stay in a declining market. The main point is that if you are selling puts on companies you want to own anyways then it is a win-win.

      I look forward to seeing your options trades.