Like Big Oil, Big Pharma stocks like GlaxoSmithKline (NYSE: GSK) can provide Big Dividends to shareholders.
GlaxoSmithKline is superior to Big Oil Stocks like Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) in that it has a robust profit margin. For GlaxoSmithKline, the profit margin is 27.60 percent. That is far superior to the 8.10 percent profit margin for ExxonMobil and the 9.20 percent profit margin for Chevron.
The dividend yield of GlaxoSmithKline is also far superior, thanks in large part to the bigger profit margin!
At present, the average dividend for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 1.9 percent. Many articles have detailed how Big Oil stocks easily top that dividend yield. Chevron has a dividend yield of 3.32 percent. The dividend yield for ExxonMobil is 2.77 percent.
GlaxoSmithKline offers a far superior dividend yield!
The dividend yield for GlaxoSmithKline is now 5.30 percent. The stock is down in market action for the last quarter, six months, and year. For 2014, GlaxoSmithKline has dropped by nearly 5 percent (chart below). During that period, the Standard & Poor’s 500 Index has risen by nearly 9.4 percent.
Investors should view this as an opportunity to buy GlaxoSmithKline at a discount for long term gains.
When the stock price drops, the dividend yield rises. THat makes GlaxoSmithKline even more appealing to long term investors when its dividend yield is climbing. Wall Street is certainly bullish about the long term prospects of GlaxoSmithKline as demographics favor firms in the health care industry: the world is getting older which means more spending on pharmaceutical products.
The company is now trading around $49.10 a share.
Over the next year of market action, the mean analyst consensus target price for GlaxoSmithKline is $55.67. Even though it is up for the last week and month of market action, few on Wall Street are betting that the stock price will fall for GlaxoSmithKline as the short float is barely 0.42 percent. Combined with the robust dividend yield, long term investors are looking at a healthy total return with GlaxoSmithKline!
