LyondellBasell: 4.9% Dividend Yield - Material Sector Dividend Payer Standout

LYB

LyondellBasell NV (NYSE:LYB) is a quality BBB S&P credit rated international material sector specialty chemicals company headquartered in Houston TX. It deals in ethylene plastics, olefins, polypropylene, and related products. It is in the process of converting a Houston oil refinery to plastic recycling.

The chart below shows the current price on April 15, 2023, which gives it a dividend yield of 4.91%. The 52-week Low and High are shown.

Price

My first purchases of LyondellBasell were in 2020 from a high of $91.51 down to $39.90 in just that year. That was a real roller coaster ride and it happened to also be lows for many other stocks that year. The Yahoo Finance 5-year price graph below shows the steep decline the stock price took in early March 2020.

The current price of $96.85 is tickling a recent high, but it has done a full circuit of bottoming too at a price in the low 70s just last September, shown below in the 1-year chart from Yahoo Finance. That was another low month for many stocks.

Below is the Yahoo Finance analyst buy recommendation of 2.7 which is just above hold. 24 analysts have the price target running from $75 to a high of $130. The current price is shown in blue and is just below, but near, the average of $98.19.

Below is the complete list of analyst-suggested price targets using the following abbreviations:

M* = Morningstar.

FV = Fair Value.

BUY 5* = M* cheap buy it now price.

VL = Value Line with the Mid Pt being 15 months out or 2024.

CFRA = TD Ameritrade broker analyst $ price.

FAST Graphs

The following colors/lines on the "FG" chart represent the following:

Black line = price.

White line = dividend.

Orange line = Graham average of usually 15 P/E "price/earnings" for most stocks.

Blue line = Normal P/E.

Dashed or dotted lines are estimates only.

Green Area represents earnings.

Statistics by year are noted for high and low prices at the top of the chart in black and for earnings and dividends at the bottom of it. The % shown is for the change from year to year for earnings with an E after any number representing an estimate.

With the black price line near the blue normal P/E line of 8.66x earnings, it would seem the price is attempting to rise back up. I know the next earnings report is due soon or on April 28th. Below is the Yahoo Finance chart showing earnings reports for 2022 and Q4 just beat estimates.

They actually have estimated earnings for Q1 to be higher, which will be interesting, as that is where FG differs in the chart above. The FG chart shows earnings will probably be lower and the price at that earnings level should also go with it; down. (8.66 x $9.05 = $78.37). I am seeing the Value Line suggestion of $76 or so perhaps happening, but then the remainder of the year seems to be headed upward. So much depends on how this is received and if management can color the future bright with expected earnings rising again in 2024 to $10.72 = price of ~ $92. The price is a puzzle as demand is somewhat weakening with recession worries and costs rising; so, I believe anything can happen and will.

Folks love the dividend and the chart does show a raise should occur as discussed next.

Dividend

The large bump shown in FG in the white line was the extra special $5.20 June payment on top of the regular dividend, as listed in the chart below from my broker TD Ameritrade.

Past Dividends

The dividend raise should be announced with that earnings report coming April 28th. FG has it going from $4.76 to $ $4.95 and they tend to be quite accurate. That 19c raise which, if given, would = 4% and indeed to me would be quite acceptable and appreciated.

The next earnings report could be very eye-opening in many regards for price and dividend and I await it eagerly.

Summary/Conclusion

LyondellBasell NV is a solid quality BBB credit rated company with a now attractive dividend yield, solid balance sheet, but entering a weakening economy with somewhat lower product demand. A trading alert was issued at the Macro Trading Factory service to decrease position size with anticipation of the coming earnings report and what might cause a drop in price. The dividend payments last year were amazing, so it hurts to decrease size, but I do anticipate adding it back again as the economy improves, which I do believe will happen, but patience might be needed. The current dividend yield and anticipated continued dividend raises, even if smaller, still give it a nice holding place in the RIG portfolio; which is my recommendation. If not owned, I suggest watching for a lower price, as it has proven to be quite cyclical in that regard.

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