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GSK dividend: Will drugmaker reconsider raising payout after another forecast-beating quarter?

By Daniela Ešnerová

12:34, 2 November 2022

GSK logo
GSK ups its expectations for FY 2022 but does not plan adjusting dividend of 61.25p/share for the year. – Photo: ShutterStock

The UK biotech company, GSK, has raised its 2022 estimates for the second time this year after posting forecast-beating quarterly earnings, confirming its strong performance as a standalone business.

In light of its recent success, will the drugmaker reconsider raising the dividend payout for its investors?

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Successful spin-off

In July, GKS spun-off of its consumer healthcare business, now known as Haleon Group. Haleon listed on the London Stock Exchange (LSE) in what was the biggest European initial public offering in over a decade. After the demerger, the new GSK's focus is vaccines and prescription medicines.

GSK's stronger-than-expected Q3 results were driven by the shingles vaccine Shingrix, which brought £760m to the company - above the consensus forecast of £685m.

“In recent weeks, pharma firm GSK seems to have had the cure for what has been a sickly share price over the long term,” said Russ Mould, investment analyst at AJ Bell. 

“Raising guidance in its latest update on strong vaccine sales, there is increasing excitement about its new respiratory syncytial virus vaccine candidate,” he added.  

London Stock Exchange (LSE) 

Flat dividends

Commenting on the results, GSK's chief executive, Emma Walmsley, said the company expects “good momentum in 2023, further strengthening our confidence in our performance outlooks, driven by Shingrix global expansion and expected new launches including our new RSV vaccine".

In light of these expectations, will the drugmaker increase the dividends? According to analysts, this could be overdue.

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“Despite that popularity, the sad reality is that GSK has long been a disappointment on almost every front, with its share price stuck in a sideways range for more than 20 years and its dividend remaining flat for the last eight years,” says John Kingham, founder and managing director at UK Value Investor.

“Unsurprisingly, shareholders have been pushing for radical change to break this cycle of stagnation and, in 2022, radical change is what they got.”

No change to expected full-year dividend

However, investors will have to wait longer for a higher dividend payout. GSK said there is no change to its expected full-year dividend of 61.25p per share. 

The company declared a dividend of 13.75 pence for the third quarter, down from a restated 23.75p a year prior.

The expected dividend for the last quarter of 2022 is expected to be 13.75p resulting in an expected total dividend for the second half of 2022 of 27.5p per new ordinary share.

GSK expects to pay a dividend of 56.5p per new ordinary share in 2023. 

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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