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Analyzing LyondellBasell’s 3Q17 Dividend

Peter Neil - Author

Sep. 8 2017, Updated 1:30 p.m. ET

LyondellBasell’s 3Q17 dividend

LyondellBasell’s (LYB) board approved its 3Q17 dividend on August 23, 2017. LyondellBasell will pay a dividend of $0.90 per share on September 13, 2017. Investors who held shares on or before September 6, 2017, will be eligible for the declared dividend. The dividend will be paid on the company’s outstanding shares. LyondellBasell’s peers Eastman Chemical (EMN), Westlake Chemical (WLK), and Huntsman (HUN) declared dividends of $0.51, $0.21, and $0.13 per share, respectively.

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Dividend growth

LyondellBasell’s dividend of $0.90 per share represents 5.90% growth on a year-over-year basis. For fiscal 2017, with the current dividend rate, the company is expected to pay a dividend of $3.55 per share, which is 6.60% higher than the dividend paid in fiscal 2016. Since 2011, LyondellBasell’s dividend has grown at a CAGR (compound annual growth rate) of 15.40%.

Free cash flows

The free cash flow is critical for a company. The free cash flow allows the company to finance its expansion activities, dividend payments, and share repurchases. We’ll discuss how LyondellBasell’s free cash flow can support its dividend growth. At the end of 2Q17, LyondellBasell’s free cash flow was $1.41 billion. On a per share basis, it stood at $3.50. For a better understanding, we’ll convert LyondellBasell’s free cash flow into free cash flow per share.

Since 2013, LyondellBasell’s free cash flow per share has grown at a CAGR of 11.70%, which is much lower than its dividend growth. It isn’t a favorable situation. It could have a negative impact on LyondellBasell’s other financial activities in the long run.

Investors can invest in LyondellBasell indirectly by investing in the iShares U.S. Basic Materials ETF (IYM). IYM has invested 4.90% of its portfolio in LyondellBasell as of September 7, 2017.


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