15 Global Dividend Stocks to Diversify Your Portfolio

6. Diageo plc (NYSE:DEO)

Number of Hedge Fund Holders: 34

Dividend Yield as of December 27: 4.80%

Diageo plc (NYSE:DEO) is among the best dividend stocks to invest in.

On December 18, Morgan Stanley lowered its price target on Diageo plc (NYSE:DEO) to 1,530 GBp from 1,595 GBp and kept an Underweight rating on the shares.

A day earlier, Diageo announced a major asset sale as it works to bring down its debt. The company agreed to sell its stake in its Kenyan business to Asahi in a deal valued at $2.3 billion. Management has been clear this year that divestments would play a role in repairing the balance sheet, and this transaction fits that plan.

Under the agreement, Diageo plc (NYSE:DEO) will sell its 65% stake in East African Breweries Limited, or East African Breweries Limited, to Asahi. Diageo will still maintain a presence in the market through a licensing arrangement with EABL, allowing it to keep some commercial ties to the region. The deal values EABL at $4.8bn and is expected to reduce Diageo’s net debt-to-earnings ratio by about 0.25 times. That matters because the company’s leverage is currently above its target range of 2.5 to 3 times.

Asahi will pay close to $3 billion for the transaction. This includes $2.35 billion for Diageo plc (NYSE:DEO)’s full stake in Diageo Kenya and $646 million for a 53.8% stake in UDVK, the group’s local distilling unit. Together, those holdings represent Diageo’s 65% interest in EABL. After taxes and deal-related costs, Diageo expects to receive $2.3 billion in cash.

Earlier this year, interim chief executive Nik Jhangiani said the company was planning significant divestments to ease pressure on the balance sheet. Diageo has been dealing with weaker alcohol demand and the impact of US President Donald Trump’s trade tariffs, both of which have weighed on performance.

Diageo plc (NYSE:DEO) produces and distributes a wide range of alcoholic beverages, with brands that include Johnnie Walker, Crown Royal, J&B, Buchanan’s, and Windsor.