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I adore it when a plan comes collectively, and that’s now taking place with a FTSE 100 dividend share I purchased in March 2024. The inventory in query is pharmaceutical big GSK (LSE: GSK), which appeared good worth after I purchased it, with a worth‑to‑earnings (P/E) ratio of round 8. That was crushed down by years of underwhelming efficiency.
The GSK share worth continued to slip after I purchased it. The primary purpose was the US class motion over its heartburn drug Zantac. No sooner was that settled with a $2.2bn payoff than US tariffs on prescribed drugs threatened. I quickly discovered myself down round 15%, which wasn’t a part of the plan, being sincere, however I stayed calm and issues at the moment are wanting up.
GSK shares up 12 % within the final month, lifting the 12‑month acquire to about 33%. I’m solely up round 10% personally however these are early days, as a result of this was a inventory I plan to carry years, and ideally a long time.
Lengthy-term FTSE 100 play
I final lined GSK for The Motley Idiot on 28 October after I famous the share worth restoration was below means however the shares nonetheless appeared good worth with a P/E of 10.6. The P/E ratio had edged as much as 11.45, however that’s nonetheless comfortably under the FTSE 100 common of round 18.
On 29 October GSK printed its Q3 outcomes and so they have been sturdy. Core working revenue rose 11% to £2.99bn whereas core earnings per share jumped 14% to 55p.
The board declared a 3rd‑quarter dividend of 16p a share and confirmed £2bn of share buybacks by mid‑2026, with £1.1bn already achieved. The total‑yr steerage was raised too.
GSK’s pipeline lastly seems to be delivering, speciality medicines are driving development and free money circulation is robust. The restoration feels credible.
Dealer forecasts so-so
But there are dangers. The tariff threats hasn’t absolutely lifted and whereas the pipeline is wanting higher, potential blockbuster medication are by no means assured. A weak trial, regulatory setback or litigation shock might knock confidence.
Dealer forecasts produce a 12-month consensus worth goal round 1,773p. Sadly, that’s really under right now’s worth round 1,806p. If these predictions are appropriate, the following yr gained’t be pretty much as good because the final. Analyst scores are combined too: solely 9 of 23 charge GSK inventory a Purchase whereas 4 say Promote.
But I imagine that is nonetheless a discount, for buyers who’ve a protracted‑time period view. No person can say the place any share worth will go within the quick time period, however over time, I’d count on GSK to ship a gentle mixture of development and earnings. The trailing yield is a modest 3.35%, however ought to develop steadily. The shares are forecast to hit 3.57% in 2025, and three.83% in 2026.
GSK appears value contemplating for buyers trying to create a balanced portfolio, together with publicity to the pharmaceutical sector, historically seen as a defensive nook of the market. In the present day appears like a great entry level, given the low P/E, however buyers ought to solely purchase with the long run in thoughts. That ought to all the time be a key a part of the plan when shopping for FTSE 100 shares.
