Diageo (DEO) Loses 15.6% on Dividend Cut

We recently published 10 Stocks Left Behind in a Roaring Market. Diageo plc (NYSE:DEO) was one of the worst performers on Wednesday.

Diageo fell by 15.66 percent on Wednesday to close at $86.15 apiece, as investor sentiment was dented by its new chief executive’s dividend cut, as well as a weak outlook for 2026.

In an updated report, Diageo plc (NYSE:DEO) said that it would pay a lower-than-usual dividend of 20 cents to its ordinary shareholders, an initiative which it said would help strengthen its balance sheet.

“The Board has taken the difficult decision to reduce the dividend to a more appropriate level, which will accelerate the strengthening of our balance sheet. We are confident that this is the right action which will ensure that Diageo can reinforce its position as the leading international spirits business and drive stronger shareholder value over the coming years,” the company said.

The dividend cut followed a 4 percent lower revenue in the first six months ending December 2025, ending at $10.46 billion versus $10.9 billion in the same period a year earlier.

Net income, on the other hand, inched up by 1.7 percent to $2.1 billion from $2.07 billion.

“Our performance in the first half of fiscal 26 was mixed. Strong performance in Europe, LAC (Latin America and Caribbean) and Africa, was offset by a weakening performance in NAM (North America) and continued weakness in Chinese white spirits in APAC (Asia Pacific). US Spirits performance reflected pressure on disposable income, and competitive pressure from more affordable alternatives addressing a more stretched consumer wallet,” said newly installed CEO Dave Lewis.

“Only several weeks in, I can already see significant opportunities for Diageo to act more decisively to enhance its competitiveness and broaden the portfolio offering, leading to higher growth.”

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