Hi Traders,
Earlier in the year in the Option Pit Dividend Portfolio I chose Diageo over Constellation Brands. Same shelf, very different bet — and ten weeks in, the tape has already picked a side.
I bought Diageo (DEO) at $83.08 on May 29. It’s trading near $92 today — up roughly 11% — and I haven’t even collected the dividend yet.
Constellation (STZ)? It was around $140 in late May and sits near $131 now, down mid-single digits.
Same sector, same “people are drinking less” headwind, and an eighteen-point swing in performance between them.
That gap is the whole thesis.
Here’s the part I want you to sit with, because it’s the real lesson. On August 6, Diageo cut its dividend — roughly in half — alongside a new CEO, a billion-dollar cost plan, and a stock near a 14-year low. And the shares went up about 5% on the day.
Read that twice. The company slashed the payout, and the market bought the stock anyway.
Meanwhile Constellation left its dividend fully intact — and the stock kept leaking.
That is the age we’re investing in. In a world being reordered by disruption, story trumps dividend, because you’re not underwriting next quarter’s check — you’re underwriting where a brand sits in 2032.
If you bought Diageo for the yield, you got a haircut. If you bought it for the trophy — the two-hundred-year-old distillery, the aged scotch, the high-end tequila the wealthy buy through every cycle — the cut was noise. The market agreed.
Why do I trust the trophy? Look at what price-insensitive wealth does. The Lakers sold for $10 billion in 2025, then flipped this week for $12.5 billion — a $2.5 billion gain in 14 months on an asset whose entire value is that it’s irreplaceable.
And here’s the line I keep coming back to: AI can’t code a new Los Angeles Lakers. It can’t code a barrel of scotch aging since before you were born. Scarcity, heritage, and a buyer who doesn’t flinch at price — that’s a moat AI can’t touch.
Constellation sells the case. Diageo owns the trophy. I’ll take the trophy.
Diageo is just one of the stocks in my Dividend Portfolio running right now. New stocks dropping in soon.
Here for a good time AND a long time,
Hans Albrecht