DEO - Warren Buffett's Buying This Passive-Income Stock. Should You?
2023-10-25 06:27:00 ET
Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) discloses the stocks it holds each quarter. That means we can follow Berkshire's recent buys and sells, and one new purchase in 2023 is Diageo (LSE: DGE) (NYSE: DEO) , a U.K.-based alcohol beverage company with brands that include Guinness, Captain Morgan, and Smirnoff, among others.
According to its most recent filing, Berkshire owns 227,750 shares of Diageo, equating to a roughly 0.04% ownership stake. That's tiny in the context of Berkshire buys, and Diageo stock has fallen an estimated 11% since Berkshire initiated the position in the first quarter of 2023, so let's look at why Berkshire might have purchased Diageo and whether the stock is worth adding to your portfolio.
Over the past five years, publicly traded alcohol companies have struggled as a whole. During that time, Diageo stock generated a total return (stock appreciation plus dividends) of only 21%, trailing the benchmark S&P 500 's total return of 66%. Still, Diageo's smaller competitors by market capitalization, Brown-Forman (NYSE: BF.A) (NYSE: BF.B) and Constellation Brands (NYSE: STZ), have also lagged the market, with a five-year total return of 25% and 11%, respectively.
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Warren Buffett's Buying This Passive-Income Stock. Should You?