How to buy, sell and short Diageo shares

How to buy or invest in Diageo shares

There are two ways to buy Diageo shares – derivatives trading and share dealing (investing).

Derivatives, such as CFDs and spread bets, enable you to speculate on upward or downward share price movements without taking ownership of any physical shares. If you want to own the underlying shares, you can invest via share dealing. If you invest, you could also receive dividend payments, if the company offers them.

Follow these steps to trade or invest in Diageo shares:

Discover the differences between trading and investing

How much would it cost to invest in Diageo?

Diageo has a primary listing on the London Stock Exchange (LSE), which makes it eligible for our best commission on UK shares, provided you opened three or more positions on your share dealing account in the previous month.

If you don’t want to take ownership of Diageo shares, you can speculate on the share price with derivates in order to:

• Get full exposure with a 20%-25% deposit on almost all of our tier one shares1
• Trade spread bets without paying any tax2
• Hedge your positions with CFDs and offset any losses against potential profits

How to sell and short Diageo shares

You can sell physical Diageo shares with us, even if you bought them through another provider – by transferring them to us for free. Or, you can go short on the share price by speculating on downward price movements. The benefits of short-selling include the ability to profit from falling share prices, and the opportunity to hedge against any existing investments or long positions.

Diageo shares: the basics

Diageo shares are listed on the London Stock Exchange (LSE) under the ticker DGE, where it is a constituent of the FTSE 100. It also has secondary listings on the New York Stock Exchange (DEO) and Euronext (GUI).

Strong fundamentals make Diageo shares a popular choice for investors. The company’s shares have historically performed very well, with a 56.7% share price increase over the past five years, despite the wider market decline caused by the coronavirus pandemic.3 Diageo delivered a robust set of full-year 2020 results, and the company remains positive that alcoholic beverages will remain highly attractive in future.

Diageo pays a dividend twice a year – split approximately 40/60. In 2020, the dividend was 69.88p per share.4

What is Diageo’s business model?

Diageo’s business model can be broken into two segments:

• Premiumisation – where the aim is to reach more consumers, ‘increasing the penetration of spirits around the world’4
• Sustainability and responsibility – which focuses on reducing harmful alcohol use, protecting natural resources and increasing diversity in the workplace

Diageo has more than 200 brands, including Smirnoff, Johnnie Walker and Guinness. It sells these beverages in more than 180 countries around the world, with its biggest revenue producers being scotch and beer.

Diageo key personnel: who manages the company?

Diageo has several executives that manage the company in different regions across the globe. The key players are:

How to analyse the Diageo share price

Buying or selling Diageo shares must always be based on a solid foundation of both technical and fundamental analysis. It’s important to study Diageo’s financials and other factors that affect the business before using your capital to deal shares or trade derivatives. You should also analyse the health of the economy and its sectors, review news reports, study the competition, and gather all other relevant information before making a trading or investment decision.

• Technical analysis is concerned with chart patterns, technical indicators and historical price action
• Fundamental analysis is based on the fundamentals of a company, including its net revenue or profit and loss statements

Some popular technical indicators are:

• RSI, which assesses the momentum of assets to gauge whether they are in overbought or oversold territory
• Moving averages, which can help to determine the direction of the current trend
• Stochastic oscillator, which enables you to identify the end of one trend and the beginning of another

Some popular fundamental metrics are:

• Earnings per share (EPS): determine the value attached to each share and whether the business is profitable or not by calculating Diageo’s earnings per share (EPS). To calculate EPS, divide Diageo’s profit by the number of outstanding shares
• Price-to-equity (P/E) ratio: outline how much you need to spend on Diageo shares to make $1 in profit. To calculate P/E, divide Diageo’s current market value per share by its EPS
• Return on equity (ROE): measure how much income the company makes on assets compared to shareholder investments. To calculate ROE, divide Diageo’s net income by stakeholder equity
• Dividend yield: compare the company’s annual dividends to the share price. To calculate dividend yield, divide the dividend amount by the share price, and then multiply by 100

Learn everything you need to know about fundamental analysis

Buying and selling Diageo shares summed up

• There are two ways to buy Diageo shares – derivatives trading and share dealing
• Derivatives enable you to speculate on share price movements without taking ownership of shares
• Share dealing enables you to own the underlying shares and receive possible dividend payments
• You can buy Diageo shares from as little as £3 with us
• Buying or selling Diageo shares must always be based on a solid foundation of technical and fundamental analysis