The dividend for 2014 =$1.72 (11p x 1.56 (dollar rate) x 10 for the ADR's) without the $5.00 cash or $12 in stock from VZ.
VOD has averaged 7% increase in the dividend rate over the last 4 years and it looks like they will try and do the same going forward. If they do, here's what we can expect in the next 4 years for a dividend:
What will the stock be worth with these dividends?
Sorry to bring this to you but the company is effectively halving it's div. It is seting the div at 11p/share (UK) but consolidation the share count after the deal about 2:1. So the div will only be about 5.5% going forward on the VOD shares. But this will allow them to raise the div 8%/yr there after, and the div will only be 50% of FCF. Much better. Basically re-basing the div.
I'm sorry but I have not seen anything from the company indicating that such an event is about to take place. If there is a reverse split, then I believe the dividend amount will follow the %, in other words, if there is reverse split (2 for 1) then the dividend amount will double.
I do not think ANY of the big shareholders would stand still and hold on to their shares if they thought that this was about to happen. This being said I also don't see the the dividend rate going up to 11% once the distributions are completed in Q1. In other words, I don't see much movement (maybe down to $25) in the stock price after we receive the $17 in distributions.
Good analysis. No wonder the stock is stuck around $32. The big unknown though is VOD's valuation after the sale. If T is after VOD remaining parts then valuation could take a jump along with the P/E.
"Vodafone will pay about $5 billion in taxes, and $3.5 billion to buy Verizon's minority stake in Vodafone Italy." [from seeking alpha] Buying out VZ's stake in Italy could be another indication VOD is being set up for a deal with T. Ed
What I was looking for was if VOD does increase in the dividend rate by 7% over the next 4 years then here's where I expect the stock to be based on a 5.5% dividend rate:
When all is said and done, assuming there are no additional transactions, you will have:
1) approx $5 cash
2) approx $12 in VZ stock
3) approx half as many shares of VOD stock as you have now
With current VOD shares at $32, the market is valuing your post share consolidation shares at approx $30.
$5 + $12 + $15 = $32
The VOD share price WILL NOT be halved it’s the number of VOD shares that will be halved instead of 48 billion shares there will be 24 billion shares.
SO example if you had 20,000 VOD shares you will then drop to have 10,000 VOD shares, also to the value of the other 10,000 VOD shares will be in a cash dividend and also Verizon Communications (VZ) shares. IF you was to sell the VZ shares and also use the cash dividend you would be able to buy back the remainder 10,000 shares you originally had in VOD so that you then was back to owning 20,000 VOD shares.
The sale of VW = £84bln VOD is giving £54.3bln back in cash and VZ shares, after paying the tax £5bln the balance of £24.7bln will be in the rump of VOD.
So the only way to gain from this (although it will cost you dealing cost) is to buy back the half of shares you will lose in the 112p dividend (cash & VZ shares).
THEN you would gain from the 8% increase in the VOD dividend of 11p for the year, and increasing each year.
ALSO VOD’s £27 billion debt will to £5 billion.
Regards. Nige Co