How LyondellBasell’s Dividend Yield Has Changed

A dividend yield is a measure of a company’s annual dividend per share in relation to its price per share. The metric indicates how much cash investors get for every dollar invested in the company’s equity. A high dividend yield is a good sign because it provides investors with a stable income.

On May 25, 2017, LyondellBasell (LYB) stock closed at $80.67. With LYB’s 2Q17 quarterly dividend of $0.90 per share, its current dividend yield is 4.4%. Peers Dow Chemical (DOW), DuPont (DD), and Eastman Chemical (EMN) currently have dividend yields of 3.0%, 2.0%, and 2.6%, respectively.

LyondellBasell’s dividend yield has been on an upward trend due to higher dividend growth and lower growth in LYB’s stock price. The company has the highest dividend yield among peers. Its attractive dividend yield easily overshadows the yield from one-year Treasury bills and qualifies LYB as one of the highest dividend-yielding companies.

Dividend payout is calculated by dividing annual dividend per share by annual EPS (earnings per share) and is expressed as a percentage. It tells us what percentage of earnings a company is paying out in dividends.

Since 2012, LyondellBasell’s dividend payout has been between 29.0% and 37.0%. It has increased its dividend payout every year since 2012. In 1Q17, LYB’s dividend payout stood at 42.9%, maintaining the upward trend. However, if LYB’s upward dividend payout trend continues, LYB might face difficulty with future growth and expansion unless earnings per share outpace dividend growth.

You can indirectly hold LyondellBasell by investing in the Vanguard Materials ETF (VAW). VAW invests 3.4% of its holdings in LYB as of May 25, 2017.

In the next part of this series, we’ll take a look at the latest analyst ratings for LyondellBasell.