Very interesting comments. My father sought and got a job at Guinness in 1957 because “it was the best company to work for” and he and everyone he knew there thought the same. They knew the salary scale changes were based on how well the company was doing and received one months bonus each Christmas. He used that to purchase shares in the company each year and retired with a double pension pot as he saw it! In retirement the dividends purchased more shares.
My sister and I continue with his belief and Diageo shares are by far our largest and most successful investments. Apart from growth, the dividends over time make a significant contribution to returns.
Thanks for highlighting Diageo and its remarkably strong brands. Perhaps unusually, I compare large UK companies with their international competitors before investing and a few years I chose Brown Forman (BF) in preference to Diageo. Although BF can't boast Diageo's depth of brand strength, BF does claim to have the "best selling individual brand of whiskey in the world" in Jack Daniels. One aspect of the BF business which impressed me was that its ROIC over the past 5 years has been around the 18 to 20 mark whilst Diageo is a bit more variable but around the 12 mark (with thanks to Gurufocus). I think these ROIC firgures are consistent with Diago achieving only 3.8 times the net income of BF, yet Diageo has 5.3 times the number of staff at BF. I dont' think that you can go far wrong with either of these companies but my slight preference would be with BF purely on the financial figures. I am also aware of the risk of directly comparing figures reported in the US to those of the UK so I hope my conclusions are not affected by this.
Very interesting comments. My father sought and got a job at Guinness in 1957 because “it was the best company to work for” and he and everyone he knew there thought the same. They knew the salary scale changes were based on how well the company was doing and received one months bonus each Christmas. He used that to purchase shares in the company each year and retired with a double pension pot as he saw it! In retirement the dividends purchased more shares.
My sister and I continue with his belief and Diageo shares are by far our largest and most successful investments. Apart from growth, the dividends over time make a significant contribution to returns.
Thanks for highlighting Diageo and its remarkably strong brands. Perhaps unusually, I compare large UK companies with their international competitors before investing and a few years I chose Brown Forman (BF) in preference to Diageo. Although BF can't boast Diageo's depth of brand strength, BF does claim to have the "best selling individual brand of whiskey in the world" in Jack Daniels. One aspect of the BF business which impressed me was that its ROIC over the past 5 years has been around the 18 to 20 mark whilst Diageo is a bit more variable but around the 12 mark (with thanks to Gurufocus). I think these ROIC firgures are consistent with Diago achieving only 3.8 times the net income of BF, yet Diageo has 5.3 times the number of staff at BF. I dont' think that you can go far wrong with either of these companies but my slight preference would be with BF purely on the financial figures. I am also aware of the risk of directly comparing figures reported in the US to those of the UK so I hope my conclusions are not affected by this.
Kind regards,
John