Invesco Perpetual’s Woodford sells out of long-standing position in Vodafone

Invesco Perpetual’s Neil Woodford has sold his position in Voadafone, a former favourite in his two large income funds.

Woodford (pictured) has been gradually selling down his position in the telecoms giant over the past twelve months, and recently completely exited the stock.

Vodafone was a core holding in both Wooford’s funds for many years, worth 4.7% of his £11.9bn Invesco Perpetual High Income fund last April.

However, last summer Vodafone dropped out of Woodford’s top ten holdings amid fears over the sustainability of its payouts.

Mitchell Fraser-Jones, product director for UK equities at Invesco Perpetual, said: “In terms of trading activity, the fund has now completed the sale of its holding in Vodafone.

“The company announced a share buy-back rather than the hoped for special dividend with its dividend from Verizon Wireless, while we also have reservations about the company’s ability to maintain its margin on data revenues.”

Last October JO Hambro’s Clive Beagles and Threadneedle’s Simon Brazier also cautioned over Vodafone’s dividend prospects after analysts suggested its payouts were unsustainable.

Analysts at Nomura downgraded the stock from ‘buy’ to ‘neutral’ last September, arguing investors need to start focusing on dividend risk at Vodafone due to its reliance on cash from its stake in Verizon.

Despite a rally late last year, the stock has underperformed the wider FTSE 100, and is virtually flat in share price terms compared to a year ago, currently trading at around 170p.

 

This article was first published on Investment Week

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