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Diageo plc (LON:DGE): The Best Of Both Worlds

Diageo plc (LON:DGE) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of DGE, it is a financially-sound , dividend-paying company with a a strong track record of performance. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Diageo here.

Solid track record established dividend payer

Over the past year, DGE has grown its earnings by 11%, with its most recent figure exceeding its annual average over the past five years. This illustrates a strong track record, leading to a satisfying return on equity of 27%. which is an notable feat for the company. DGE’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that DGE manages its cash and cost levels well, which is an important determinant of the company’s health. DGE appears to have made good use of debt, producing operating cash levels of 0.3x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

LSE:DGE Income Statement Export January 1st 19
LSE:DGE Income Statement Export January 1st 19

For those seeking income streams from their portfolio, DGE is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 2.3%.

LSE:DGE Historical Dividend Yield January 1st 19
LSE:DGE Historical Dividend Yield January 1st 19

Next Steps:

For Diageo, there are three essential aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for DGE’s future growth? Take a look at our free research report of analyst consensus for DGE’s outlook.

  2. Valuation: What is DGE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DGE is currently mispriced by the market.

  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DGE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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