Vodafone (LSE:VOD) shares have had a little bit of a tough trip these days. Over the past 5 years, the inventory’s tumbled by over 40%. And whereas dividends had been maintained at 9 cents between its 2019 and 2024 fiscal years (ending in March), they had been in the end slashed in half throughout its FY 2025.

The choice to chop dividends got here on account of administration attempting to steer the corporate again on observe. Don’t overlook dividend payouts are speculated to be a method of returning extra money technology to shareholders. However new CEO Margherita Della Valle has as an alternative prioritised debt discount in addition to reinvesting in its personal community infrastructure, such because the rollout of 5G.

This determination, whereas unpopular amongst revenue buyers, appears prudent for long-term sustainability. And it comes as part of the group’s new restructuring programme that seeks to revive margins, re-spark development, and additional enhance the well being of the steadiness sheet.

The query now could be, with the share price down considerably and early indicators of turnaround progress rising, is now a superb alternative to contemplate shopping for? And if that’s the case, how a lot passive revenue might buyers earn?

Will dividends rise?

With the Vodafone inventory price buying and selling at round 74p, buyers can snap up 10,000 shares with a £7,400 lump sum. At present, the dividend per share sits at 3.81p when transformed from euros. And that locations the following passive revenue stream at £381.

In fact, this assumes that one other dividend minimize isn’t proper across the nook. Fortuitously, trying on the newest analyst projections, it appears the specialists suppose that is unlikely. Sadly, dividend development doesn’t seem like within the image both, with the dividend per share projected to stay flat for the following 4 years.

That’s not totally stunning. Vodafone’s an £18bn enterprise with roughly £45bn of debt to take care of. Each analysts and administration have highlighted debt discount as an instantaneous precedence. And whereas some noteworthy progress has been made lately, the group’s leverage stays concerningly excessive.

Disposals of non-core operations have helped increase some important capital to deal with this difficulty whereas concurrently refocusing the enterprise. These choices have already helped bolster free money circulation technology to additional enhance monetary flexibility. However with its core German market struggling to return to development, Vodafone’s turnaround story might take some time.

The underside line

As revenue shares go, Vodafone shares don’t appear to supply very a lot when in comparison with different dividend-paying alternatives on the London Inventory Change. Nevertheless, that doesn’t imply there’s no worth to be unlocked.

Suppose Della Valle’s turnaround technique continues to hit key milestones? In that case, investor sentiment might drastically enhance. And we’ve already seen the form of positive aspects that may be unlocked throughout a profitable turnaround when Rolls-Royce (up 680% in 5 years).

For now, I’m protecting Vodafone shares on my watchlist. But when its German operations get again on observe and efficiency continues to enhance in its different core markets, it may be time to contemplate leaping in.