It’s been a good month for shareholders in GlaxoSmithKline (LSE: GSK) — including me. Like a zombie on Halloween, the GSK share price lurched back to life in October. What’s more, the pharma giant’s stock is finally showing positive returns over longer periods. After recent steep rises, is it time for me to sell my shareholding and move on?
The GSK share price’s ups and downs
At its five-year closing peak, the GSK share price hit 1,846p on 17 January 2020. Around that time, I made a serious effort to sell my holding, as I was worried about the growing threat of Covid-19. I’ve owned GSK stock for most of the past 30+ years, but couldn’t find several of my paper certificates. Hence, I held off selling my shares — to my regret today.
As the coronavirus spread worldwide, the GSK share price collapsed amid a global stock market crash. It plunged during March 2020, but then pulled back to close 2020 at 1,342p. But the shares weakened in early 2021, hitting a low of 1,190.8p on 26 February. The very next day, guided by Warren Buffett’s wisdom, I said I would buy more GSK shares at this discounted price. And I’m glad I did, because this FTSE 100 share has rebounded strongly since.
As I write on Tuesday afternoon, the GSK share price stands at 1,550.55p, up 6.15p (+0.4%) today. It’s also ahead by 7.5% over five days and has gained 12% over one month. Over three months, the stock has added 8.6% over three months and has leapt by almost a sixth (+16.4%) over six months. Also, it’s gained 17% in one year and has inched up by 1.4% over five years. (Every little helps, as the Tesco slogan says.)
Should I sell into this strength?
Earlier today, the GSK share price hit a 52-week high of 1,555.2p. At the current price of 1,550.55p, it has soared by almost 360p from its February low. That’s a surge over over three-tenths (+30.2%) in nine months, valuing the group at over £78bn today. After such a comeback, should I sell my GSK stock? To be honest, I’m in two minds.
There are two things I like about GSK today. First, the 80p-a-share yearly cash dividend, which equates to a dividend yield of 5.2% a year. That’s ahead of the FTSE 100’s forecast dividend yield of 4% for 2021. Second, I was pleasantly surprised at the strength of GSK’s latest quarterly results. Revenues, profits, and earnings were all ahead of consensus forecasts, as all three divisions (pharma, vaccines, and consumer healthcare) reported sales growth.
There are also two things I dislike about GSK today. First, the group has already warned that it will cut its tasty dividend next year. Second, GSK will split into two separate listed companies next year (Biopharma and Consumer Healthcare). Along with a couple of major activist investors, I’d prefer CEO Dame Emma Walmsley not lead the Biopharma arm.
To sum up, I’m sitting on the fence when it comes to the current GSK share price. I won’t actively buy at this price, but I’ll also hold off selling for now. As a compromise, I’ll keep drip-feeding my hefty dividends into more GSK shares, just to be on the safe side!
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Cliffdarcy owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
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