LyondellBasell's board has roughly halved the chemical company's rich dividend amid a prolonged industry downturn.
The broader market is expensive right now. Price-to-earnings (P/E) ratios in the 20s and even 30s and higher are the current “norm.
When a stock's dividend yield is approaching or exceeding double-digits, it's only natural for investors to feel intrigued. With an indicated dividend yield of approximately 9.5%, chemical stock LyondellBasell Industries NYSE: LYB is an interesting name worth evaluating.
LyondellBasell Industries N.V. (LYB) Q4 2025 Earnings Call Transcript
LyondellBasell posted a narrower quarterly loss as sales topped, while most segments saw revenue declines, the company boosted its cash improvement target.
LyondellBasell Industries N.V. reported Q4 net losses but maintained positive operating cash flow amid ongoing chemical sector weakness. LYB's 11% dividend yield is attractive but not fully covered by free cash flow, introducing risk of a potential cut if markets worsen. Management targets $500M in additional cost reductions and a $700M capex cut in 2026 to bolster free cash generation.
LyondellBasell (LYB) came out with a quarterly loss of $0.26 per share versus the Zacks Consensus Estimate of $0.18. This compares to earnings of $0.75 per share a year ago.
LYB heads into Q4 with lower operating rates, seasonality and higher feedstock costs pressuring results.
LyondellBasell (LYB) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
LyondellBasell Industries' EPS revisions for FQ4 and also full FY2025 suggest dividend coverage ratios far exceeding 100%, inviting questions towards its payout sustainability. I do see coverage pressure due to challenging dynamics in the petrochemical markets. However, I also believe simply EPS coverage ratios severely overstate the coverage pressure for LYB.
LyondellBasell (LYB) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price increase in the near term.
LyondellBasell faces a more structural than cyclical downturn as Chinese capacity additions and below-cost operations for non-economic reasons prolong oversupply in key petrochemical markets, pressuring revenues for several years. A declining oil-to-gas price ratio is eroding LyondellBasell's feedstock cost advantage, and the outlook for oil and gas prices suggests further gross margin pressure ahead. LyondellBasell's free cash flow has turned insufficient to fully cover dividends, and limited liquidity runway raises the likelihood of a dividend reduction to protect its credit profile.