It’s been an interesting 12 months for shareholders of GSK (LSE: GSK), formerly GlaxoSmithKline. I’ve owned GSK shares for most of the past three decades, but my wife and I have sold the bulk of our stock, leaving only ‘legacy holdings’ behind.
Selling out of GSK
My wife worked for this group from autumn 1989 until spring 2021, a total of 31.5 years. During a career lasting over three decades, she amassed large numbers of GSK shares.
Some shares were totally free, given as performance rewards. Some were discounted through GSK’s SAYE (Sharesave) scheme. Some were ‘buy one, get one free’ via her monthly Share Rewards scheme. Also, GSK granted her tons of yearly options via long-term incentive plans.
Remarkably, my wife never bought a single GSK share in the open market, yet ended up as a significant individual shareholder in her employer. But when she was made redundant and given early retirement on enhanced terms in April 2021, GSK cashed out the vast majority of her stock. Even better, her employer paid the tax due on these sales, delivering a big boost to her final payout.
GSK shares split in two
Despite her massive one-day sale, my wife still has a modest GSK shareholding. So do I, inside a long-disused share account that I’ve hardly looked at in years. But when GlaxoSmithKline split into GSK and consumer-health group Haleon (LSE: HLN) in July 2022, we both received shares in this new offshoot.
As a result, for each GlaxoSmithKline share we owned, we now own one share in GSK and another in Haleon. GSK is now free to concentrate on biopharma and vaccine products, while Haleon sells a whole host of popular health brands like Sensodyne and Centrum.
GSK’s ship has steadied
For many years, I’ve not been convinced by GSK’s performance under CEO Dame Emma Walmsley. To be blunt, the share price has disappointed under her leadership since April 2017. Hence, in some ways, I was rather relieved when my wife left the group and her shareholding was liquidated.
When Haleon was demerged (at a share price of 330p), GSK consolidated its shares, turning five shares into four. Taking this into consideration, the post-demerger share prices are 1,177.28p and 327.66p respectively, with a combined total of 1,504.94p. Thus, my wife’s big sale was made when the GSK share price was well above today’s effective GSK+Haleon price.
Should I sell my remaining GSK shares?
Here’s where the fundamentals of both companies stand today:
| Company | GSK | Haleon |
| Market value | £60.4bn | £30.3bn |
| Price-to-earnings ratio | 13.5 | 21.4 |
| Earnings yield | 7.4% | 4.7% |
| Dividend yield | 6.1% | N/A |
| Dividend cover | 1.2 | N/A |
Being a relative newcomer to the London market, Haleon has yet to declare any cash dividends. But analysts expect its prospective cash yield to be between 2% and 3% a year.
Meanwhile, GSK is cutting its yearly cash dividend from its historic 80p a share. The expected full-year dividend of 56.25p translates into a forward cash yield of 3.8% a year. That’s in line with the wider FTSE 100 index.
In summary, I’m fairly relieved that we no longer own a big shareholding in GSK. But the shares look in better shape lately, so I’ll keep mine and might even buy more one day!
