Earlier at this time, 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 value collapsed in April — a ‘fallen angel’ enterprise I hope to be a restoration play. The opposite loss was brought on by the Diageo (LSE: DGE) share value crashing this yr.
Dreadful Diageo
At their 2025 excessive, Diageo shares hit 2,567.5p on 9 January. Alas, the share value has fallen steeply ever since. On 10 December, it hit a 2025 low of 1,587p, earlier than rebounding barely. From prime to backside, that’s a collapse of 38.2%.
As I write, Diageo inventory trades at 1,608p, valuing this international 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 value 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 wanting dreadful.
Scrumptious dividends
Nevertheless, the slumping share value has pushed Diageo’s dividend yield a lot greater. Proper now, this inventory gives a dividend yield of 4.9% a yr — a degree I don’t recall seeing in lots of a long time of following this share.
Even including dividends to the above returns leaves Diageo shareholders nursing heavy losses. But as I usually remind myself, shopping for shares offers 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 clever transfer for me?
What I’ll say is that I don’t assume the worst is over for this big British enterprise fairly but. One downside 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 all the way down to moderation amongst older drinkers, fairly than rising teetotalism (sobriety).
In fact, nights out with mates 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 traits are unfavourable for Diageo and the like.
2026 turnaround?
One other challenge 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 doubt ‘kitchen sink’ the group’s subsequent set of outcomes. In different phrases, I count on numerous write downs and doom and gloom within the half-year outcomes due on 25 February 2026.
Lastly, one factor that almost 40 years of investing has taught me is to tug up the weeds in my portfolio, fairly than go away them be. However as I believe the Diageo share value will fare significantly better in 2026 than this yr, I’ve determined to carry onto our stake for restoration. Nevertheless, any extra nasty information and I’ll should take a hefty loss by promoting out!
The submit Will the Diageo share value crash once more in 2026? appeared first on The Motley Idiot UK.
Do you have to make investments £1,000 in Diageo plc proper now?
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Extra studying
- Who will likely be subsequent yr’s FTSE 100 Christmas cracker?
- My 3 FTSE 100 predictions for 2026
- FTSE 100 shares: has a once-a-decade probability to construct wealth ended?
- £10,000 invested in Diageo shares 4 years in the past is now value…
- Down over 30% this yr, might these 3 UK shares bounce again in 2026?
The Motley Idiot UK has advisable Diageo. Cliff DâArcy has an financial curiosity in Diageo shares. Views expressed on the businesses talked about on this article are these of the author and subsequently might differ from the official suggestions we make in our subscription providers, corresponding to Share Advisor, Hidden Winners and Professional. Right here at The Motley Idiot, we imagine that contemplating a various vary of insights makes us higher buyers.
