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From A to V: Why I'm Buying More Apple and Vodafone

Stocks in this article: AAPL VOD CHL T VZ

I'm bracing for whatever comes on Tuesday, but even if Apple and China Mobile isn't a done deal, investors will likely become focused on holiday sales of the phone, with pent-up demand in the West.

When it comes to Vodafone (VOD), I'm hoping to buy more shares at around Monday's low of $32.89.

In case you've been climbing Mt. Everest or visiting the orbital space station, Vodafone sold its 45% stake in Verizon Wireless to its partner Verizon (VZ) for a jaw-dropping $130 billion U.S. dollars.

Vodafone shareholders are in for the payday of a lifetime. About $84 billion of the total will be given to shareholders, $60 billion in Verizon stock and about $24 billion in cash will be distributed directly to Vodafone's fortunate shareholders.

Based on my own research, it appears the dividend payout will be eligible for the most favorable tax treatment for U.S. shareholders. Yes, the whole enchilada, Verizon shares and cash is likely to be considered a "qualified dividend."

If that is correct, the fair market value of Verizon's stock and all that $24 billion in cash will be classified as "qualified" dividend income. That would mean most investors will be taxed at a 15% rate.

There are some holding period requirements that look reasonable. If I'm not mistaken, shareholders have to hold their Vodafone stock for a 121-day holding period that starts 60 days before the ex-dividend date. That means don't plan on selling your Vodafone stock before the 121-day period is over.

Another great reason to like Vodafone shares is the company plans an 8% to 11% increase in its dividend during fiscal 2014. With the stock at $33 a share, the yield is already 5%.

Verizon shares will be a nice way to be paid as well. Verizon closed at $45.91 on Monday which means its current $2.12 per year dividend payout translates to a yield of more than 4.6%. The company's directors recently increased the dividend for the seventh year in a row.

The Vodafone sale of its Verizon Wireless shares is expected to close in the first quarter of 2014. The money the company keeps will empower its focus on its primary markets in Europe and allow Vodafone to go after new growth opportunities in Asia, the Middle East and Africa.

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