The latest information and news emerging from GlaxoSmithKline (GSK) is of encouragement to investors generally but to dividend investors most particularly. Although the company is one of the stock markets dividend yield staple, with a long established reputation for cash generation, a glance at the trends in its cash flow statements is a bit disconcerting.
Medical matters are on my mind as I have the Norovirus. But it takes more than that to stop me writing about companies but naturally my mind turns to drugs. Well I was a young man in the sixties – the 1960s not the 1860s before you ask. Talking of ancient history, the market long ago abandoned the assumption that GlaxoSmithKline (GSK) would automatically build a pathway for shareholders to a starlight future of endless profits and earnings growth, by simply spending 15% of its sales revenue on R&D, and turning that into an approved blockbuster therapy every few years. In truth, costs rose and progress became more difficult – the return on R&D capital was not acceptable.
