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Why I think the GSK share price can pay you for life

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I think the GlaxoSmithKline (LSE: GSK) share price is one of the best income investments in the FTSE 100.

As such, if you’re looking for an investment that can pay you a passive income stream for the rest of your life, I think it’s worth checking out GSK. 

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Today I’m going to explain why I think this company is one of the market’s best dividend stocks, and why now could be the perfect time to buy it. 

GSK share price on offer 

Companies with defensive, predictable income streams make the best dividend investments. I think GlaxoSmithKline falls into this bucket. 

The company is one of the largest developers and producers of vaccines in the world. This is an often underappreciated sector of the global healthcare economy.

Vaccinating populations against preventable diseases is an essential part of many countries’ healthcare systems. These vaccination programmes are funded through government initiatives in the developed world and charities as well as foreign aid in the developing world.

As the world’s population continues to grow, these programmes are going to become more critical. What’s more, as developing countries become more self-sufficient, the demand for vaccines should grow. 

This is just one of the reasons why I’m bullish on the GSK share price. The company also has an established niche in the market for HIV treatments and is investing billions of pounds in oncology. 

Healthcare market

Over the past decade, the size of the $10trn global healthcare market has increased at a compound annual rate of 7%. The growth rate could hit 9% per annum by 2022, according to current projections. 

GlaxoSmithKline will almost certainly benefit from this expansion. The company spends billions of pounds every year on research development. This helps it stay at the forefront of the global healthcare market. I think that as long as management continues to invest in the group’s growth, the GSK share price has the potential to produce large total returns for investors over the long run. 

At the time of writing, the stock currently supports a dividend yield of 5.3%. As the payout is covered 1.4 times by earnings per share, it looks as if the dividend is here to stay. What’s more, the stock is currently trading around 10% below the level at which it began the year. 

I think this could be an excellent opportunity to snap up a share in this high-quality business at a discount price.

Not only is the GSK share price trading below the level it started the year, but the stock is also changing hands at a forward price-to-earnings (P/E) multiple of 12.8. That’s a discount of around 32% to the pharmaceutical sector average. 

These numbers suggest shares in GlaxoSmithKline could rise by as much as 30% from current levels. Including the company’s dividend yield, this implies the stock could return as much as 35% over the next 12 months. 

Therefore, now could be the perfect time to buy this pharmaceutical giant. 

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Rupert Hargreaves owns no share mentioned. 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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