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 Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!