Vodafone Announces First Dividend Hike in 8 Years, Shares Surge 5%
Vodafone has announced its first dividend increase in eight years, with shares jumping 5% to 94 pence. The company reported a 5.9% rise in first-half adjusted earnings to 5.73 billion euros. CEO Margherita Della Valle's strategy has led to growth in Germany and accelerating service revenue in the UK, Turkey, and Africa. Vodafone expects to reach the upper end of its full-year forecasts, with adjusted core earnings of 11.3-11.6 billion euros and group adjusted free cash flow of 2.4-2.6 billion euros.
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Vodafone, the European and African telecom giant, has announced its first dividend increase in eight years, signaling a turnaround in its financial performance. The company's shares responded positively, jumping 5% to 94 pence, reaching a two-and-a-half-year high.
Improved Financial Performance
Vodafone reported a 5.9% rise in first-half adjusted earnings to 5.73 billion euros. This improvement in financial metrics has led the company to introduce a progressive dividend policy, with an expected 2.5% increase for the year ending March 2026.
Key Financial Highlights
| Metric | Value |
|---|---|
| First-half adjusted earnings | 5.73 billion euros |
| Earnings growth | 5.9% |
| Expected dividend increase | 2.5% |
| Share price increase | 5% |
| New share price | 94 pence |
Strategic Turnaround
CEO Margherita Della Valle's strategy appears to be yielding results. The company has returned to growth in Germany and shown accelerating service revenue in the UK, Turkey, and Africa. This positive momentum comes after a challenging period that saw Vodafone cut its dividend by 40% in May 2019 due to 5G spectrum costs.
Future Outlook
Vodafone expects to reach the upper end of its full-year forecasts:
- Adjusted core earnings: 11.3-11.6 billion euros
- Group adjusted free cash flow: 2.4-2.6 billion euros
These projections indicate the company's confidence in its current strategic direction and operational improvements.
Market Response
The dividend increase and improved financial outlook have been well-received by the market, as evidenced by the 5% surge in Vodafone's share price. This positive reaction suggests that investors are gaining confidence in the company's ability to deliver sustainable growth and returns.
The telecom sector has faced challenges in recent years, including high infrastructure costs and intense competition. Vodafone's ability to increase its dividend in this environment is a significant milestone, potentially signaling a broader recovery in the sector.
As Vodafone continues to focus on its core markets and invest in next-generation technologies, investors and industry observers will be watching closely to see if this positive momentum can be sustained in the long term.
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