FTSE 100 buyers are spoilt for selection with regards to dividend shares. Some top-class UK blue-chips are at present buying and selling at low valuations whereas providing respectable yields. Two have simply jumped into view.

I really maintain considered one of them: pharmaceutical big GSK (LSE: GSK). Sadly, it hasn’t given me a lot pleasure, to date.

Once I first began writing for this website, 15 or 16 years in the past, a fellow Idiot spoke of GlaxoSmithKline (because it was then) with awe. It supplied heaps of revenue and baggage of share price progress, and its future seemed as vibrant as a button.

GSK’s misplaced decade

Then its medication pipeline began to run dry, forcing CEO Emma Walmsley to throw cash at research & improvement (R&D) fairly than buyers, as she battled to replenish it. 

GSK froze the dividend per share at 80p for years, then re-based it to simply 44p in 2021. Peeling off its Sensodyne-maker Haleon in July 2022 didn’t kick GSK into life. US litigation actually didn’t assist. And now GSK has Donald Trump to cope with, as his administration menaces overseas medication corporations.

The GSK share price is down 20% within the final yr and trades at related ranges to a decade in the past. It’s removed from a basket case although. On 30 April, the board reported a 2% bounce in complete Q1 gross sales to £7.52bn and confirmed full-year steering regardless of tariff issues.

A price-to-earnings ratio of simply 8.95 seems tempting, whereas GSK’s yield has crept up to 4.28%. I maintain the pharma inventory and though it’s been a irritating expertise, I nonetheless assume it’s value contemplating for a bargain-hunters keen to place up with some short-term frustration.

Markets uncertain of Shell

My subsequent low-cost blue-chip is oil & gasoline big Shell (LSE: SHEL)? It’s additionally not the no-brainer portfolio maintain of yore.

The pandemic robbed Shell of its proud observe report of not chopping dividends because the struggle, and net-zero confusion and the sliding oil price is wreaking additional havoc. The one optimistic is that it’s in a greater place than rival BP, at present in strategic disarray.

The Shell share price is down 13% over the past yr. It even missed the bounce of the final month, failing to revive when triggered by Trump stepping again on commerce threats.

It doesn’t assist that oil is sliding in the direction of $60 a barrel. With OPEC rumoured to be climbing manufacturing, it would fall decrease.

Dividends and buybacks

On 2 Could, Shell posted better-than-expected first quarter adjusted earnings, with revenue beating consensus at $5.6bn. It additionally launched a recent $3.5bn share buyback, making this the 14th consecutive quarter when it’s purchased a minimum of $3bn of its personal shares. If that’s failure, carry it on.

It’s not all excellent news although, with internet debt topping $41bn. Shell additionally faces stress to push on with the inexperienced transition, because it tries to steadiness maintaining buyers and local weather campaigners joyful.

These issues are mirrored in in the present day’s low P/E of simply 8.7%, whereas the dividend yield has edged up in the direction of 4.5%. Once more, I feel this blue-chip big is effectively value contemplating at in the present day’s discounted valuation. But I’m not anticipating a right away restoration. As soon as once more, sturdy nerves and persistence are required.