Black Friday wasn't kind to U.S. stocks. Every major U.S. stock index fell by more than 2% on the holiday-shortened trading session due to concerns about the omicron coronavirus variant. Although it is still too early to tell if this latest variant will disrupt global commerce in a significant way, stock markets around the globe are likely to be on the volatile side until this threat is resolved. In turn, investors may want to take a defensive-oriented approach to stocks for perhaps the remainder of the year.

What is the best strategy to ramp up your portfolio's defense against marketwide volatility? Owning shares of companies with stable free cash flows, better than average dividend yields, and reasonable valuations is always a good idea, especially in uncertain economic climates. The pharma titan GlaxoSmithKline (NYSE:GSK) ticks all of these boxes. Here's why this top pharmaceutical stock is worth buying right now. 

A yellow road sign that reads High Yield, Low Risk.

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GlaxoSmithKline: A transformation story

GlaxoSmithKline (aka Glaxo) has been one of the worst-performing big pharma stocks over the past 10 years. The U.K. drugmaker's shares are currently down by over 1% during this lengthy period, which is an impressive feat given that it spanned one of the hottest bull markets in recorded history.

Glaxo's shares have vastly underperformed its peers over the prior 10 years due to a plethora of headwinds, such as patent expirations, poor returns on external and internal pipeline candidates, and costly business development activities that failed to impress Wall Street. In an odd turn of events, however, Glaxo's stock has easily been one of the best-performing equities within the realm of biopharmaceuticals in 2021.

GSK Total Return Price Chart

GSK Total Return Price data by YCharts

Glaxo's resurgence in 2021 is particularly noteworthy in light of the fact that a wide swath of the biopharma industry is currently down by double-digits this year. The pharma giant's stock, in fact, is close to a 52-week high at the time of this writing.

Glaxo's strong year stems primarily from management's bold decision to finally carve out the consumer healthcare unit into a stand-alone business starting in 2022. Coupled with this demerger, the drugmaker also expects to be active on the merger and acquisition scene in an attempt to bolster its pharmaceutical portfolio and pipeline.

While speculative in nature, Glaxo might decide to deepen its relationships with current partners Adaptimmune Therapeutics, Arrowhead Pharmaceuticals, and/or 23andMe Holding Co. as soon as next year. Such moves would give the company truly novel research and development capabilities heading into the second half of the decade, a feature that is sorely lacking from its drug development platform at present. 

Now, the bad news is that Glaxo will slash its dividend by about 30% next year to generate the cost-savings necessary to pursue value-creating acquisitions. Glaxo's annual dividend yield is thus set to fall from its current eye-popping 5.37% to a more modest 3.76% (with all else being equal).

That's still an above average dividend yield for a large-cap pharmaceutical stock, however. What's more, the drugmaker's shares are presently valued at under 2.5 times its 12 month trailing sales, which is a rock bottom valuation for a top dividend stock.   

All things considered, Glaxo's stock offers investors a high degree of safety in this turbulent market, thanks to its ongoing transformation into a growth-oriented company, top notch dividend program, and dirt cheap valuation. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.