Down 55%, is now the time to buy Diageo shares for my ISA?
Currently trading at a decade low, Diageo shares look severely undervalued yet continue to offer a solid dividend yield. Since early 2022, shares of Diageo (LSE: DGE) have lost over half of their market value. Meanwhile, the FTSE 100 index climbed by roughly 30%, meaning investors could have achieved much better returns elsewhere during this period.
I can say this from experience, as I personally held Diageo in my Stocks and Shares ISA until the beginning of this year. After selling my stake, the company’s shares dropped another 27%, making them cheaper and the yield even more tempting. This raises the question: should I consider buying back into Diageo?
Iconic global portfolio
Diageo owns a world-renowned collection of leading beverage brands that dominate the premium spirits market:
- Johnnie Walker
- Tanqueray
- Gordon’s
- Smirnoff
- Don Julio
- Baileys
- Guinness
“Just writing this list — which is in no way exhaustive — makes me wonder how on earth the stock is down 55% in less than four years.”
The main challenge lies in understanding whether the recent slump across the alcohol industry represents a temporary downturn or a more structural issue. At present, no consensus exists on why sales across the sector have cooled so sharply.
Author’s summary
Despite significant share price weakness, Diageo’s powerful brand portfolio and steady dividends suggest potential long-term value if the alcohol market stabilizes.