Vodafone deal presents challenge for income investors

UK income managers may be set for a huge boost if Vodafone agrees to sell its 45% stake in Verizon Wireless, but any deal could create longer-term problems for the UK dividend market.

Vodafone has long been one of the biggest dividend payers in the UK, and its 2012 special dividend, paid out as a result of the Verizon joint venture, saw it top the pile last year, according to Capita. The company said is in talks over a disposal of the joint venture stake, and is expected to confirm the sale today. Any deal could raise £65bn-£80bn and prompt a huge payout to shareholders.  However, given the greatly reduced size of the remaining business, the company’s prospects after that point are less clear.  “There is no way you will be getting the same dividend [from Vodafon...