LyondellBasell Pleases Investors with Dividend Increase
LyondellBasell’s second quarter dividend
On May 24, 2017, LyondellBasell (LYB) announced a dividend of $0.90 per share for 2Q17 on the company’s outstanding common stock. The dividend is payable on June 12, 2017, to shareholders of record on June 5, 2017.
LYB peers Dow Chemical (DOW), DuPont (DD), and Eastman Chemical (EMN) declared dividends of $0.46, $0.38, and $0.51, respectively. In this series, we’ll look at LYB’s latest dividend announcement, the company’s dividend yield, and analysts’ latest recommendations.
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From 2013 to 2016, LYB’s dividends have risen at an impressive CAGR (compound annual growth rate) of 18.5%. LYB’s dividend of $0.90 per share represents a growth of 5.9% over 2Q16. For 2017, the growth will be at 6.6% compared to 2016, assuming LYB maintains the declared dividend.
LyondellBasell’s free cash flow
It’s important for investors to know if a company is generating enough free cash flow to sustain dividend growth. Dividends are usually paid out of free cash flows. For our analysis, we’ll consider LyondellBasell’s free cash flow and convert it into free cash flow per share.
Since 2013, LYB’s free cash flow per share has risen at a CAGR of 11.7% through the end of 2016. That’s lower than its dividend growth of 18.5% over the same period. This situation isn’t ideal for LYB. In the long run, this kind of high dividend growth is hard to sustain with a lower free cash flow growth per share.
You can indirectly hold LyondellBasell by investing in the Materials Select Sector SPDR ETF (XLB), which invests 4.1% of its portfolio in LYB as of May 25, 2017.
In the next part of this series, we’ll look at LyondellBasell’s dividend payout and its current dividend yield.