Why I’m a Long-Term Investor in GlaxoSmithKline plc (GSK)

Page 1 of 2

LONDON — Back in 2007, I made the first of several purchases that together built up a small stake in GlaxoSmithKline plc (LSE:GSK) (NYSE:GSK) . Then in my early fifties, it seemed a prudent addition to the income-generating portfolio of stocks that I hope will help to secure a comfortable retirement for me.

Nor do I plan on selling the stake. In fact, by the end of this year, I expect my holding in GlaxoSmithKline to be even larger.

In short, I’m a long-term investor in the company and see it as a core part of my retirement strategy.

So let’s briefly review why, and discuss the merits that I see in a holding of GlaxoSmithKline.

GlaxoSmithKline plc (ADR) (NYSE:GSK)

Income generation
Priced today at 1,456 pence, GlaxoSmithKline’s shares are on a forecast price-to-earnings ratio of 12, which is around the market’s average. But the forecast yield is decidedly higher — at 5.3%, it’s around 50% more than the market average.

Income growth
Over the last 10 years, GlaxoSmithKline has grown its dividend at a compound rate of 4.9% a year. Now, that’s not “shoot the lights out” territory, but it’s still a decent track record — and one that in more recent times has also been comfortably exceeded. Roll the clock forward and if that growth is maintained, then in a further 10 years’ time my income will be 60% higher than it is today.

Defensive qualities
Better still, that income looks set to be sustainable, thanks to GlaxoSmithKline’s strong showing in both health care and consumer products. Significantly, the company’s dividend held up during the credit crunch and ensuing recession on 2008, when many companies cut their payouts to investors.

Employing around 99,000 people and manufacturing almost 4 billion packs of medicines and health care products every year, the company is also a consumer business with a robust collection of strong brands: Ribena, Horlicks, Lucozade, Aquafresh, Sensodyne, Panadol, Tums, Zovirax – and, of course, the Macleans range of toothpaste, mouthwash, and toothbrushes.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!