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Earlier immediately, I used to be reviewing the FTSE 100 index to find the shares that had jumped or slumped in 2025. To my remorse, I found that my household portfolio owned the Footsie’s two worst performers on this class. One inventory we purchased after its worth collapsed in April — a ‘fallen angel’ enterprise I hope to be a restoration play. The opposite loss was attributable to the Diageo (LSE: DGE) share worth crashing this yr.
Dreadful Diageo
At their 2025 excessive, Diageo shares hit 2,567.5p on 9 January. Alas, the share worth has fallen steeply ever since. On 10 December, it hit a 2025 low of 1,587p, earlier than rebounding barely. From high to backside, that’s a collapse of 38.2%.
As I write, Diageo inventory trades at 1,608p, valuing this world drinks producer at £35.6bn. On 31 December 2001, the shares closed at 4,036p. Thus, they’ve crashed by 60.2% from their post-Covid-19 excessive. Yikes.
Moreover, the Diageo share worth is down 35.6% over one yr and a whopping 44.9% over 5 years. In distinction, the FTSE 100 is up 52% within the final half-decade, leaving Diageo shares trying dreadful.
Scrumptious dividends
Nevertheless, the slumping share worth has pushed Diageo’s dividend yield a lot larger. Proper now, this inventory provides a dividend yield of 4.9% a yr — a degree I don’t recall seeing in lots of many years of following this share.
Even including dividends to the above returns leaves Diageo shareholders nursing heavy losses. But as I typically remind myself, shopping for shares provides me a stake in an organization’s future, not its previous. However would shopping for extra of this bombed-out FTSE 100 share actually be a sensible transfer for me?
What I’ll say is that I don’t suppose the worst is over for this big British enterprise fairly but. One drawback is that UK alcohol consumption this yr fell to its lowest degree since one survey started in 1990. Certainly, this yr’s booze gross sales are greater than 1 / 4 decrease than in 2005. That is largely right down to moderation amongst older drinkers, somewhat than rising teetotalism (sobriety).
After all, nights out with buddies are far more costly nowadays. For younger adults, boozing competes with social media, video video games, and authorized (and illicit) hashish for leisure and ‘enjoyable’ spending. All of those tendencies are unfavourable for Diageo and the like.
2026 turnaround?
One other situation is that the group has appointed a brand new CEO, Sir Dave Lewis, who begins work on 1 January. Famend as a turnaround skilled, Sir Dave will little question ‘kitchen sink’ the group’s subsequent set of outcomes. In different phrases, I count on a number of write downs and doom and gloom within the half-year outcomes due on 25 February 2026.
Lastly, one factor that just about 40 years of investing has taught me is to tug up the weeds in my portfolio, somewhat than depart them be. However as I think the Diageo share worth will fare a lot better in 2026 than this yr, I’ve determined to carry onto our stake for restoration. Nevertheless, any extra nasty information and I could must take a hefty loss by promoting out!
