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I’ve been looking for the best share to buy for 2026, and now I’m wondering if I already own it! The company in question is FTSE 100 pharmaceutical giant GSK (LSE: GSK), which I bought 18 months ago.
Funnily enough, I wasn’t that enthused at the time. I certainly didn’t think it was the best UK stock to buy then, because it had been struggling for years. So what’s changed?
Why I chose GSK shares
I originally bought GSK to plug a hole in my Self-Invested Personal Pension (SIPP), which I’d just set up by consolidating a number of old company and personal pensions. I didn’t have any healthcare exposure, yet sector rival AstraZeneca looked too expensive after its stellar run. As a rule, I tend to target out-of-favour stocks, which are typically cheaper, have higher yields, and long-term recovery potential. So I plumped for GSK.
The road to recovery can be bumpy, and so it proved. I quickly found myself nursing a 15% loss. Now I’m back in the black as the shares have bounced – and I think there could be more to come.
Back in the noughties, GlaxoSmithKline (as it was then called) was considered an unshakeable portfolio building block, offering reliable dividend income and growth. Then investors began fretting about its drugs pipeline, fearing it wasn’t producing enough new treatments to replace earlier blockbusters losing patent protection.
The dividend per share was frozen at 80p for eight long years as CEO Emma Walmsley poured profits into much-needed R&D instead. Hard to argue with the logic, but income seekers still felt short-changed. Then in 2022, the dividend was slashed by almost 28%, rebasing it at 57.75p, and many long-suffering investors lost faith. Which is when I dived in.
Dividends and growth
Now the mood’s finally shifting. The stock’s up roughly 20% over the last three months and almost 30% over 12 months. The dividend’s slowly being repaired too, although a trailing yield of 3.38% is still below the glory days. It should rise though, with analysts expecting 3.61% in full year 2025 and 3.87% in 2026.
Despite the recent surge, the shares still look decent value. Broker Berenberg recently noted that GSK trades on 10.3 times 2026 adjusted earnings, below the European peer average of 13.7.
The ageing population should boost demand for treatments, while GSK has worked to mitigate tariff risks by committing $30bn to US-based R&D manufacturing.
Naturally, there are still concerns. Bringing new drugs to market is far from easy, even if AI may speed up trials. Much now rests on how well new launches such as Blenrep and depemokimab perform.
I don’t expect the GSK share price to go gangbusters in 2026, but for investors willing to take a long-term view, I think it’s well worth considering. Maybe not the single best share to buy, because there’s plenty of competition on the FTSE 100, but it’s certainly high on my list.
