3 Reasons Why Vodafone Remains A Buy

| About: Vodafone Group (VOD)

Shares of the world's third largest telecommunications company, Vodafone Group Plc (VOD), are up more than 5% so far in 2012. However, there are three reasons why VOD remains a buy.

VOD Chart
(Click to enlarge)

VOD data by YCharts

Options Activity

Option Monster reported on the high level of bullish options activity recently: 30,000 October 32 calls were purchased. At the same time, an equal number of October 30 calls were sold. This action indicates that a previously existing position was closed and rolled to a higher strike. The large block trade likely represents institutional money. Institutional money is usually smarter, thus worth following. In summary, the recent options activity points to more upside ahead for VOD over the medium term.


Despite its exposure to Europe, VOD hit a new 52-week high Friday. The break to the upside is significant because, as shown by the chart below, VOD had been consolidating for a very long time between $26 and $28. The move above $29 appears to be a clean breakout.

VOD Chart
(Click to enlarge)

VOD data by YCharts

Dividend Yield

Currently, VOD pays a dividend of $1.48 per share or 5%. Given the current interest rate environment, VOD's 5% dividend yield is very attractive. In addition to the current high yield, VOD has, as shown by the chart below, a strong history of increasing the dividend over time.

VOD Dividend Chart
(Click to enlarge)

VOD Dividend data by YCharts


Despite trading at a 52-week high, VOD remains a buy. The bullish options activity, technical breakout, and high dividend yield are all reasons why VOD remains a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Tagged: , , , Wireless Communications, United Kingdom
Problem with this article? Please tell us. Disagree with this article? .