I'll also be asking whether these positive factors make Glaxo a good investment today.
If you look at a chart for Glaxo since the turn of the millennium, you'll see that the share price has gone nowhere. In fact, the shares have fallen from more than 20 pounds in 2000 to 14 pounds today. Yet, at the same time, Glaxo's business has progressed very nicely, growing revenues and profits over the period.
How can a company's share price decline when its business has actually prospered? The answer is that Glaxo's shares have "de-rated" over the past 13 years. In 2000, investors were paying an eye-watering 30 times earnings; today, you can buy the shares at a far more reasonable 13 times earnings.
Glaxo's growing revenues and profits have enabled the company to build a strong record of annual dividend increases, as the table below shows.
If Glaxo's price-to-earnings ratio is hugely more attractive today than back in 2000, so is the dividend yield: The yield at the turn of the millennium was just 2%; today, it's a juicy 5.3%.
Despite the long-term slow decline in the share price as the stock has de-rated to a reasonable P/E, Glaxo's shares have been less volatile than the market during periods of stress.
Big pharma is a "defensive" sector, meaning it is less affected by economic conditions than "cyclical" sectors, such as house builders. Thus, in the 2007-'09 bear market, while the FTSE 100 fell 48% -- and cyclical companies considerably further -- Glaxo declined a relatively modest 20%.
A good investment?
Glaxo's shares have underperformed the FTSE 100 over the past six months -- falling 5% versus a 10% rise in the index -- as many investors have become more optimistic and backed cyclical shares for a recovery.
As I mentioned earlier, Glaxo's P/E and dividend yield are currently at historically attractive levels. If I were in the market for a sleep-well-at-night, defensive income share, the U.K.'s premier pharma company would certainly be on my list of stocks to consider.
You may be interested to know that Glaxo is a top holding of one investor with a proven track record of buying great dividend shares. Renowned City fund manager Neil Woodford has thrashed the FTSE 100 over the past five, 10 and 15 years with his 20 billion pound funds.
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