Why Vodafone Group plc is set to be a millionaire-maker stock

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Vodafone(LSE: VOD) saw its shares jump almost 6% today as the mobile telecommunications group reported a better-than-expected set of half-year results, leading to a lift in its financial outlook for the full year.

Profits up

The Newbury-based FTSE 100 telecoms giant said it had maintained good commercial momentum during the six months to 30 September, with organic revenue growth in the majority of its markets, driven by mobile data and continued success as Europe's fastest-growing broadband provider.

Profit for the period came in at EUR1.2bn, a massive improvement from the EUR5bn loss it suffered the previous year, which was largely due to a net impairment of the group's operations in India. Operating profit jumped 32.5% to just over EUR2bn, from EUR1.5bn a year ago, reflecting operational leverage and the benefit of cost efficiency initiatives.

The better-than-expected figures led management to hike its full-year guidance, and it now expects organic adjusted earnings (before interest, tax, depreciation and amortisation) to increase by around 10%, implying a range of EUR14.75bn-EUR14.95bn, compared to the previously suggested 4%-8% growth rate.

Not all good news

But it wasn't all upbeat, however. Overall revenue for the group dipped slightly to EUR23.1bn from EUR24.1bn, primarily due to the de-consolidation of Vodafone Netherlands following the creation of the VodafoneZiggo joint venture, as well as the impact of foreign exchange movements.

Management also conceded that competition in India remains intense, but there are now signs of positive developments in the Indian market, as a result of a consolidation of smaller operators and recent price increases from new entrants. Vodafone India is also making good progress in securing regulatory approvals for its merger with Idea Cellular and in monetising its tower assets in the country.

Internet of Things

During the remainder of the year, the company will continue to implement its strategic initiatives, including fibre infrastructure expansion here in the UK, as well as in Germany and Portugal. Only last week Vodafone entered the Internet of Things (IoT) consumer market with the launch of V by Vodafone which enables consumers to connect millions of home and leisure electronics products to the company's dedicated global IoT network - the largest of its kind in the world.

V by Vodafone is a simple system for consumers to connect and manage IoT devices with a product range that includes a connected car dongle, a 4G security camera, a pet location and activity tracker, and a bag location tracker. Other products categories will undoubtedly follow.

So that's the future, according to Vodafone. But back to the here-and-now, and apart from the encouraging half-year figures and exciting new initiatives, investors were also buoyed by the board's decision to recommend an improved dividend of 4.84¢ per share, up from last year's interim payout of 4.74¢.

At around 228p per share, Vodafone remains a 'buy' for income seekers with its inflation-busting 6% yield, helping you on your way to becoming a stock market millionaire.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.