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Fidelity's A-rated equity income man: why I sold Vodafone
by David Campbell on Oct 28, 2013 at 13:27
‘Following the sale of its Verizon Mobile asset, one of its main cash generative assets, I no longer think Vodafone can demonstrate [a commitment to dividend growth],’ said Clark.
‘Our analysis following the deal has significantly reduced my confidence that a post-Verizon Vodafone will be able to cover its dividend with free cash flow, or sustainably grow its dividend.’
While Vodafone won plaudits for its intention to return the bulk of the $130 billion (£80 billion) proceeds of the sale directly to investors the future security of the company’s dividend cover remains less certain.
‘Given the unpredictable nature of the telecoms business and the severe pressures within the sector in continental Europe where Vodafone does most of its business, I think Vodafone’s previously attractive dividend policy will come under severe pressure following the change in the business’s fundamentals,’ added Clark.
Over three years the manager has returned 33.3% to investors versus a Mixed Assets – Balanced peer average return of 17.8%.
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