GlaxoSmithKline (NYSE: GSK) has not only maintained but increased its already high dividend (recent yield 4.5 percent). And it’s likely to reward investors with new revenue streams as drugs in testing hit the market in the coming two years.

Like its peers, GSK has been hurt by the expiration of key patents, government crackdowns on its marketing practices, and increased competition worldwide. As a result, GSK’s sales have been relatively flat.

However, GSK is more insulated than its peers from patent expirations because of its diversified product offerings, covering all major drug categories. Its biggest segment by far—asthma and chronic pulmonary disease (COPD)—brings in about a third of revenue.

GSK’s future greatly depends on it bringing new drugs to market. Inhaler-dispensed Advair lost patent protection in 2010, but it continues to bring in some 20 percent of GSK’s revenue ($8.5 billion annually). That’s because inhaled generics typically have a harder time getting FDA approval. Still, a generic version of Advair has been approved in Europe, so competition is forthcoming in the next several years.

In response, GSK has some 30 drugs nearing final FDA testing (Phase III), with results on about half of these expected by the end of 2014. Another 100 compounds are in earlier stages of development.

Rather than revamp existing drugs, most of Glaxo’s next generation of drugs address unmet medical needs.

In the second quarter, GSK received three major FDA approvals—for COPD drug Ellipta and two skin-cancer drugs. The company may see three more drugs approved by the end of 2013, including an HIV-inhibitor for AIDS patients, with 13 more drugs expected to report late-stage results by the end of next year.

GSK’s strong cash flow allows it to fund the $800 million on average needed to bring a drug to market. And its powerful distribution network means it’s a first-choice partner for small biotech companies as well as other drug industry giants.

Further, growth in emerging markets, 26 percent of GSK’s sales currently, should mitigate patent losses in developed markets. Total sales in developing markets grew 10 percent in 2012.

Finally, Glaxo is a leader in vaccines and consumer health care products (20 percent of revenue), which augment its efforts in branded drugs, with only minor pressure on operating margins. Its consumer products include everything from Sensodyne toothpaste to sports drinks Lucozade and Ribena.

Financially fit. GSK expects sales to increase 2 percent this year, to $40.5 billion, and 3 percent here out. Profits, however, are likely to rise faster, some 4 percent annually, mostly due to ongoing cost-cutting—some $1.5 billion annually by 2016.

So although GSK already pays out about 90 percent of its profits as dividends, we think it can continue to increase the dividend annually.

Coming clean. GSK recently admitted to illegal marketing practices in China, and last year it paid a record $3 billion fine in the US for fraudulent marketing practices during the years 1997-2004.

Given the global crackdown on suspect and illegal drug-marketing practices, we think GSK and its peers are finally getting the message. In the meantime, China is only 3 percent of GSK’s sales. Barring GSK getting banned from doing business in China, this latest scandal should not greatly affect operations.

At a recent price of $52, GSK is priced in line with drug industry averages. But its high dividend and good earnings prospects, make it a worthwhile holding for conservative investors.