GlaxoSmithKline Raises Dividend to Yield 5.2%

LONDON -- The shares of GlaxoSmithKline (LSE: GSK.L  ) (NYSE: GSK  ) slid 9 pence to 1,411 pence during lunchtime London trade today despite the pharmaceutical group announcing a 6% lift to its quarterly dividend.

Within its third-quarter statement, the FTSE 100 member said core earnings for July, August, and September had come in at 26.5 pence per share, down 13% on last year and matching the group's second-quarter effort. In addition, Glaxo noted the first nine months of the year had seen core earnings drop 5% to 80.2 pence per share.

The company's Q3 earnings performance followed weak trading in Europe and the United States. "Additional austerity measures" caused European sales to contract by 9%, while "genericisation" hit U.S. revenues by 6%. Glaxo's overall top line sank 5% to 6.3 billion pounds during the quarter.

Notably, Glaxo did confirm its Q3 dividend would be 18 pence per share -- up a penny on the 17 pence declared this time last year and during the first and second quarters of 2012. The firm also said share buybacks were still expected to cost between 2 billion and 2.5 billion pounds this year.

Sir Andrew Witty, Glaxo's chief exec, said:

Our focus is to continue to deliver on our strategy to maximise growth opportunities and actively prepare for the roll-out of multiple new products. We remain confident that these new products, combined with our strengthened businesses in emerging markets and consumer healthcare and further execution of our financial strategy, provide GSK with clear opportunities to deliver sustained improvement in long-term financial performance and overall returns to shareholders.

Glaxo's trailing core earnings currently run at 109 pence per share, giving a P/E of 13. Meanwhile, the trailing 73 pence per share dividend supports a yield of 5.2%.

Right now, Glaxo is just one of a number of FTSE large-caps that offers a dividend income well ahead of what you can expect to receive from a standard savings account.

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Maynard Paton does not own shares of any company mentioned in this article. The Motley Fool has a disclosure policy.
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