GSK dividend: Will drugmaker reconsider raising payout after another forecast-beating quarter?
12:34, 2 November 2022
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.
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“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.
“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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