Down 55%, Is Now the Time to Buy Diageo Shares for My ISA?
Currently at a 10-year low, Diageo shares look extremely cheap and offer an attractive dividend yield. Since early 2022, Diageo (LSE:DGE) shares have dropped by more than half their value. Meanwhile, the FTSE 100 index has risen about 30%, meaning investors could have seen better returns elsewhere.
I speak from experience, having owned Diageo shares in my Stocks and Shares ISA until the start of this year. After I sold, the shares fell another 27%, making them even cheaper and increasing the appeal of the dividend yield. This raises the question: should I add Diageo back to my portfolio?
Diageo’s Strong Brand Portfolio
The company controls a remarkable selection of world-famous brands, including:
- Johnnie Walker
- Tanqueray
- Gordon’s
- Smirnoff
- Don Julio
- Baileys
- Guinness
Just listing these iconic brands highlights the puzzling fact that the stock has dropped 55% in under four years. Understanding this decline is vital to deciding if this is a rare buying opportunity.
Industry Challenges
It remains unclear why sales in the alcohol sector are struggling, leaving many uncertain about the future prospects of companies like Diageo.
“Nobody seems to be sure why exactly sales across the alcohol industry are in the doldrums.”
With shares now more affordable and dividends more appealing, investors must carefully weigh the risks and opportunities before deciding to buy.
Summary: Despite a steep decline in share price, Diageo’s strong brand lineup and attractive dividends may present a compelling investment opportunity, though industry uncertainty remains a key concern.