The State Pension isn’t enough! I’d buy Diageo shares today

first_img Image source: Getty Images. Harvey Jones | Tuesday, 25th February, 2020 | More on: DGE Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. The State Pension does a valuable job in providing a basic income for retirement, but it isn’t enough on its own. If you want to spend your final years in relative comfort, you will need to invest under your own steam as well.Even if you have a company pension, I would still recommend taking out a Stocks and Shares ISA to boost your retirement pot. You can invest up to £20,000 inside this year’s ISA allowance, provide you act before the 5 April deadline.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…I would recommend spreading your money between a selection of funds and top FTSE 100 stocks such as global spirits giant Diageo (LSE: DGE). It has been one of my favourites for years, a solid, established company that grows steadily, and can provide a steady underpinning for the rest of your portfolio. After a strong run, the Diageo share price has dipped lately, and this could be a rare chance to buy it at a slightly reduced valuation.I’ll drink to thatDiageo is one of those companies that always looks a little expensive to buy, and with good reason. It’s a premium business, selling premium drinks. Its brands include Guinness, Johnnie Walker, Baileys, Smirnoff, Captain Morgan, Gordon’s and Tanqueray, which it sells in more than 180 countries around the world. In the six months to 31 December, it posted reported net sales of £7.2bn, up 4.2% driven by organic growth. Reported operating profit rose just 0.5% to £2.4bn, but this was mostly due to temporary issues such as unfavourable exchange rates, exceptional operating items, and the impact of acquisitions and disposals.Diageo’s share price growth has been rather splendid, rising 66% over five years, more than 10 times the average growth across the FTSE 100, which rose just over 6% over the same period. This would have been even better but for a 10% drop in its share price over the last six months, which makes it look more tempting to me, not less.High shareholder returnsDiageo typically trades at around 25 times earnings, above the current FTSE 100 average of around 18 times. Today it is slightly below that at a 22.9 times earnings, which means it is available at a relative discount, by its high standards.Those earnings are forecast to rise steadily, up 3% this year and 6% next, which should help keep the cash flowing. Its most recent half-yearly report showed free cash flow of £1bn, which was actually down £400m, largely due to one-off tax impacts and payment timings.CEO Ivan Menezes oversees a generous shareholder return programme, which saw the interim dividend recently hiked 5%, while the company is also running a £1.1bn share buyback programme. It plans to return a massive £4.5bn of capital to shareholders over the next few years. So do not be fooled by the relatively low headline yield of 2.3%. In practice, the stock should be more rewarding than that.Diageo is the type of long-term buy-and-hold that can help you generate extra wealth, freeing you from State Pension worries, I believe. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. The State Pension isn’t enough! I’d buy Diageo shares today Our 6 ‘Best Buys Now’ Shares Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. 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