Has there been a more disappointing stock over the past decade than Vodafone (VOD)? Many listed companies fall by the wayside but, having been long since knocked from its turn-of-the-century perch as the UK’s largest company, Vodafone was supposed to be taking flight again in 2014. Instead, the intervening years have proved just as gruelling as the fallout from the dotcom era, and even now the investment case is not easy to make.
Last week, chief executive Margherita Della Valle attempted to draw the latest line under the sorry saga by selling off Vodafone’s Italian business, halving the dividend and starting a buyback programme.
Divestments, falling cash flows and pressures in core markets meant a dividend cut was widely expected. The company’s payouts may have helped limit its total return losses over the past decade to a mere 45 per cent (in simple price terms, the fall is 70 per cent), but a 10 per cent dividend yield was a sign that something had to give.