Which share should I buy?
Both Vodafone and BAE have been the subject of recent merger stories, but while BAE's failed merger with Airbus manufacturer EADS is now a closed book, Vodafone's situation is much less certain.
It seems increasingly likely that Vodafone will negotiate some kind of deal to sell its 45% stake in Verizon Wireless to its parent firm Verizon. Although this would provide a windfall for Vodafone, Verizon Wireless is the most profitable part of its business, creating some uncertainty as to how well it would fare without its U.S. arm.
Both firms offer similar dividend yields, but Vodafone's price has been pushed up by the recent bid speculation. Today, I would rather take advantage of BAE's low price and cash-rich status, and top up my holding in the U.K.'s largest defence company.