This Friday was unfriendly to US stocks. Each major US stock index fell more than 2% during the holiday trading session due to concerns about the omicron coronavirus version. Whether it is too early to say whether this latest option will significantly disrupt global trade, the world’s stock markets are likely to be volatile until that threat is resolved. Investors, in turn, may want to take a protective stance on stocks, probably for the rest of the year.

What is the best strategy to strengthen your portfolio protection against market volatility? It is always a good idea to own shares of companies with stable free cash flows, average dividend yields and reasonable estimates, especially in an uncertain economic environment. Pharmaceutical titanium GlaxoSmithKline: (NYSE: GSK) marks all these boxes. That’s why it’s worth buying this best drug stock right now.

Image source: Getty Images.

GlaxoSmithKline. Transformation history

GlaxoSmithKline (aka Glaxo) has been one of the largest and most effective pharmaceutical stocks in the last 10 years. Shares of the UK drugmaker have now fallen more than 1% over this long period, which is an impressive feat given that it has been one of the hottest bull markets in recorded history.

Glaxo shares have been significantly lower than its peers over the past 10 years due to numerous backlash, such as expiration of patents, poor profitability of external and domestic pipeline candidates, and costly business development operations that failed to impress Wall Street. In a strange turn of events, however, Glaxo shares were easily one of the best performing stocks in the biopharmaceutical industry in 2021.

GSK Total Return Price Chart

GSK Total refund price data according to YCharts

The revival of Glaxo in 2021 is particularly noteworthy in light of the fact that the wider bio-pharmaceutical industry has shrunk in double digits this year. Shares of the pharmaceutical giant are, in fact, close to a 52-week high at the time of writing.

Glaxo’s strong year is largely due to a bold decision by management to finally turn the consumer health department into a separate business starting in 2022. Along with this separation, the drugmaker also expects to be active in the acquisition-merger area, trying to strengthen. its pharmaceutical portfolio և pipeline.

Despite its speculative nature, Glaxo may decide to deepen its relationship with current partners Adaptive Therapy, Arrowhead Pharmaceuticals:, և / or: 23andMe Holding Co. Exactly next year. Such steps will give the company truly new research and development opportunities in the second half of the decade, a feature that is currently severely lacking in its drug development platform.

Now, the bad news is that Glaxo will cut its dividends by about 30% next year to create the cost savings needed to pursue value-added acquisitions. Thus, Glaxo’s annual dividend yield will be reduced from its current eye-catching 5.37% to a more modest 3.76% (all others being equal).

However, it is still above-average dividend yield for large-scale pharmaceutical stocks. Moreover, the manufacturer’s shares are currently valued at 2.5 times lower than the last 12 months of sales, which is the latest estimate for the highest dividends.

In all likelihood, Glaxo shares offer investors a high degree of security in this troubled market, thanks to the company’s high-dividend growth plan’s dirty cheap valuation.

This article presents the opinion of a writer who may disagree with the position of the “official” recommendations of Motley Fool Premium Consulting. We are motley! Questioning an investment thesis, even our own, helps all of us think critically about investing, making decisions that help us become smarter, happier, and richer.