{"id":15521,"date":"2025-05-22T07:57:07","date_gmt":"2025-05-22T07:57:07","guid":{"rendered":"https:\/\/finderica.com\/?p=15521"},"modified":"2025-05-22T07:57:07","modified_gmt":"2025-05-22T07:57:07","slug":"can-investors-rely-on-lyondellbasells-9-yield","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=15521","title":{"rendered":"Can Investors Rely on LyondellBasell\u2019s 9% Yield?"},"content":{"rendered":"
\n

The stock price of LyondellBasell Industries<\/strong> (NYSE: LYB) has been going the wrong way for years. The falling price, combined with a rising dividend, means the yield on the stock has climbed to 9%, one of the highest in the S&P 500.<\/p>\n

So it\u2019s not surprising that I\u2019ve received a lot of requests to review the company\u2019s dividend safety.<\/p>\n

LyondellBasell makes chemicals from oil \u2013 things like polymers, gasoline, and ethers.<\/p>\n

The chart of the company\u2019s free cash flow looks more like an ad for a ski resort than what you want to see in a financial presentation.<\/p>\n

\"Chart:<\/a><\/p>\n

Free cash flow has dropped in each of the past three years and is expected to decline 59% this year.<\/p>\n

As a result, the company is forecast to pay out more than twice its expected free cash flow in dividends this year.<\/p>\n

Last year\u2019s 87% payout ratio was too high. But this year\u2019s projected 218% is downright scary.<\/p>\n

The only way companies can pay out more than their free cash flow in dividends is by using cash on hand or borrowing money. LyondellBasell could do both. It has $1.9 billion in cash, but it\u2019s also not afraid to ask for a loan, as it has $10.7 billion in long-term debt.<\/p>\n

The fact that free cash flow is going to be so low this year means that management should prioritize servicing \u2013 and potentially lowering \u2013 the debt. But management teams don\u2019t always do what they should.<\/p>\n

The one positive in LyondellBasell\u2019s dividend safety analysis is its track record of raising the dividend.<\/p>\n

The company has raised its dividend every year since 2021. The dividend stayed at the same rate in 2020 in the early days of the pandemic. Prior to that, it was lifted each year since 2012.<\/p>\n

Management has shown that the dividend is a priority, and I applaud them for that. But if free cash flow doesn\u2019t improve very soon, they will likely have to cut the dividend.<\/p>\n

<\/a>LyondellBasell\u2019s juicy 9% yield is not safe.<\/p>\n

Dividend Safety Rating: F<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Leave the ticker in the comments section.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n