It’s been an interesting 12 months for shareholders of GSK (LSE: GSK), formerly GlaxoSmithKline. I’ve owned GSK shares for most of the past three decades, but my wife and I have sold the bulk of our stock, leaving only ‘legacy holdings’ behind.
Selling out of GSK
My wife worked for this group from autumn 1989 until spring 2021, a total of 31.5 years. During a career lasting over three decades, she amassed large numbers of GSK shares.
Some shares were totally free, given as performance rewards. Some were discounted through GSK’s SAYE (Sharesave) scheme. Some were ‘buy one, get one free’ via her monthly Share Rewards scheme. Also, GSK granted her tons of yearly options via long-term incentive plans.
Remarkably, my wife never bought a single GSK share in the open market, yet ended up as a significant individual shareholder in her employer. But when she was made redundant and given early retirement on enhanced terms in April 2021, GSK cashed out the vast majority of her stock. Even better, her employer paid the tax due on these sales, delivering a big boost to her final payout.
GSK shares split in two
Despite her massive one-day sale, my wife still has a modest GSK shareholding. So do I, inside a long-disused share account that I’ve hardly looked at in years. But when GlaxoSmithKline split into GSK and consumer-health group Haleon (LSE: HLN) in July 2022, we both received shares in this new offshoot.
As a result, for each GlaxoSmithKline share we owned, we now own one share in GSK and another in Haleon. GSK is now free to concentrate on biopharma and vaccine products, while Haleon sells a whole host of popular health brands like Sensodyne and Centrum.
GSK’s ship has steadied
For many years, I’ve not been convinced by GSK’s performance under CEO Dame Emma Walmsley. To be blunt, the share price has disappointed under her leadership since April 2017. Hence, in some ways, I was rather relieved when my wife left the group and her shareholding was liquidated.
But since the demerger of Haleon (at a share price of 330p), both GSK and Haleon shares have done fine. GSK trades at 1,471.6p and Haleon at 327.66p, for a pre-demerger combined share price of almost £18. That’s less than £1 above the price at which our big holding was cashed out. Not bad, but nothing to write home about.
Should I sell my remaining GSK shares?
Here’s where the fundamentals of both companies stand today:
Company
GSK
Haleon
Market value
£60.4bn
£30.3bn
Price-to-earnings ratio
13.5
21.4
Earnings yield
7.4%
4.7%
Dividend yield
6.1%
N/A
Dividend cover
1.2
N/A
Being a relative newcomer to the London market, Haleon has yet to declare any cash dividends. But analysts expect its prospective cash yield to be between 2% and 3% a year.
Meanwhile, GSK is cutting its yearly cash dividend from its historic 80p a share. The expected full-year dividend of 56.25p translates into a forward cash yield of 3.8% a year. That’s in line with the wider FTSE 100 index.
In summary, I’m fairly relieved that we no longer own a big shareholding in GSK. But the shares look in better shape lately, so I’ll keep mine and might even buy more one day!
The post Was I dumb to sell my GSK shares? appeared first on The Motley Fool UK.
5 stocks for trying to build wealth after 50
Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
Claim your free copy now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#ffffff”, ‘color’, ‘#FFFFFF’);
})()
More reading
2 shares to buy in February for healthy dividends
Earnings: are GSK shares a buy after a big earnings rise?
3 UK shares I’d happily buy to hold for the next 10 years!
3 dividend shares I’m backing to outperform in 2023!
GSK shares look cheap. Should I buy them?
Cliff D’Arcy has an economic interest in GSK and Haleon shares. The Motley Fool UK has recommended GSK and Haleon Plc. 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.