Why I’m tempted to buy GlaxoSmithKline (LON: GSK) stock now, after all these years!

Pharmaceutical giant GlaxoSmithKline (LSE: GSK) is a huge FTSE 100 stock that City analysts analyse to pieces. That’s why the share research website I use lists some 27 brokers covering the company.

A consensus regarding GlaxoSmithKline stock

And recently, 16 of those brokers have the stock as a hold, 7 as a buy, 4 as a strong buy, and 2 as a sell. But although having that information is helpful, analysts are frequently behind the curve or plain wrong. Therefore, the best course of action is for me to always do my own research and make my own decisions.

For my portfolio, I’ve had GlaxoSmithKline on a watch list for years. And my most recent note about the stock reads, “Looking for a breakout from the current base”. It bears the date 20 April 2018 — and until now, I’ve still been waiting for that condition before buying!

To me, a breakout means a sudden improvement in operational progress that will likely reflect in better revenues, earnings, cash flow, shareholder dividends, and a rising share price. My aim would be to buy the stock when the share price begins a hopefully longer move higher.

But the business has been treading water for a long time. And I reckon the best indicator of that is the record of shareholder dividends. In 2015, the total payout for the year was 80p per share. And it’s been 80p ever since, although it is set to decline — read on.

In fairness, that’s not bad. With the share price near 1,454p, the yield has been around 5.5%. So, if I’d followed the analysts’ consensus and held GlaxoSmithKline shares for the past six years or so, I’d have achieved a decent return. And that’s especially true because of the sideways progress of the share price over the period.

But for me, a dividend-led investment requires a record of annual incremental rises in the dividend with improving fundamentals to back that up. Sadly, the business has failed to deliver.

The business is in flux

However, the company is in a state of flux as it prepares to de-merge its consumer healthcare operations in mid-2022, which will likely lead to a decline in dividends from the remaining business. Chief executive Emma Walmsley said in today’s third-quarter results report that she’s confident in the outlook for “a step-change in growth and performance in 2022 and beyond”.

In the third quarter and at constant exchange rates, sales rose 10% year on year with adjusted earnings per share rising 3%. Walmsley reckons behind those figures, the business delivered “double-digit sales growth in Pharmaceuticals and Vaccines, increased momentum in Consumer Healthcare, and continued discipline on costs”.

Looking ahead, GlaxoSmithKline expects earnings to decline by between 2% and 4% for the full trading year 2021. But that estimate excludes any contribution from Covid-19 solutions. The guidance does represent an upgrade from previous expectations.

I think the consensus of City analysts’ opinions has been correct, and the stock has been a good hold. But I also think the de-merger and GlaxoSmithKline’s new focus on R&D-driven healthcare could build value for shareholders in the years to come, although nothing is certain. Indeed, all shares carry risks and the firm’s plans may not work out as expected. Nevertheless, I’m tempted to buy the stock now to see if growth reboots.