I’d buy this dividend payer in a Stocks and Shares ISA to aim for a million

A Stocks and Shares ISA is a tax-efficient way to invest in equities. Thousands of investors even have ISA millionaires, and AJ Bell has just published a list of translators FTSE 100 favorite stock.

I have caught two men, Lloyds Banking Group and Rio Tintoand have two more on my shopping list, insurance Aviva and make spirits Diageo. I would buy both, if I had the cash.

ISA investors love this FTSE 100 favourite

The rest of the millionaire-maker ISA shares BP, shell, Scottish Mortgage Investment Trust, GSK, HSBC and National Grid. I love holding these things, though GSK (LSE: GSK) would be my number one choice now.

GSK is the company formerly known as GlaxoSmithKline, before it spun off its consumer healthcare business Haleon Last July.

GlaxoSmithKline was a FTSE 100 Dividend Aristocrat for years, only to fall from grace. CEO Emma Walmsley froze dividends per share at 80p for a while, while using savings to replenish the company’s faltering drug pipeline. I love the promise of tomorrow, but in this case tomorrow seems never to come.

The demerger is designed to create GSK’s pure pharmaceutical business, without the distraction of running a consumer goods sideline. It also boosted GSK’s balance sheet, by offloading debt to Haleon.

Not yet paid for GSK. The shares have fallen 21.5% since the demerger, from 1.775p to 1.393p. Over a year they were down 10.75% and only up 2.5% over five years. GSK has worked in both old and new ways.

That’s part of the appeal for me today. I prefer to buy stocks when they are out of favor, rather than riding high and looking expensive. So I shunning ISA millionaire-producer BP and Shell, which rose 49.91% and 28.31% respectively over 12 months. I suspect I’m late to the oil price party.

I want pharma exposure

Another reason I want to buy GSK is that I have no direct exposure to the pharmaceutical sector. And I have less incentive to pluck HSBC from the ISA millionaire list since I have Lloyds.

GSK is not a dividend income machine. Instead of making 5% or 6%, today I only made 3.1%. That is also below FTSE 100 average around 4%, but good guaranteed 3.2 times by earnings. The forecast yield is 3.89%, with a cap of 2.6. It’s headed in the right direction.

Shares look like good value, trading at 10.1 times earnings. So can GSK finally start to deliver some share price growth?

Q4 profits beat expectations, rising 4% to £7.4bn, helped by strong demand for the blockbuster shingles vaccine. Sterling’s weakness also boosted US dollar earnings. Walmsley is confident of beating GSK “Ambitious sales and profit prospects for 2026”.

Now much depends on the promise of the pipeline. If it falls short, my bet may prove to be a loser, but I’m optimistic that a turnaround will happen. GSK gave me exposure to a key sector and I have now added it to the buy list, behind the ISA millionaire-producer Aviva and Diageo.

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