LYB Stock Recent News

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LyondellBasell offers a nearly 10% dividend yield, with management maintaining payouts despite cyclical headwinds and weak earnings, signaling confidence in recovery. The company's strategic focus on cost savings, niche markets, and sustainable products positions it well for long-term growth once industry conditions improve. Strong cash flow, disciplined capital allocation, and a robust balance sheet provide resilience, supporting both the dividend and future recovery potential.

LyondellBasell (LYB) is a global chemical company, producing critical chemicals that power modern life. Recent weakness in end markets - along with higher-than-average input costs - have driven net income lower. That said, we think the dividend remains safe for the time being. If a few things 'go right', LYB could produce solid total returns as a cyclical value play.

The current dividend yield is very attractive and a rare sight within the sector, but investors should not assume that it is risk-free. Given the company's current cash flow and potential profitability improvements from restructuring, a dividend cut appears unlikely. However, the risk of demand in key end-markets deteriorating further is not to be ignored and investors should keep some more dry-powder at hand.

LYB faces significant near-term headwinds with weak demand, margin pressure, and trade-related challenges, reflected in a 7.6% sales decline and lower EPS. Operational inefficiencies, outages, and higher feedstock costs have further compressed margins, but some recovery in utilization rates is expected in upcoming quarters. Long-term prospects are supported by ongoing cost reductions, asset rationalization, and strategic investments in projects like Flex-2 and MoReTec-1 for efficiency and sustainability.

LyondellBasell looks to be near a cyclical low, trading at levels not seen since 2020, with a historically high 9.5% yield and low forward P/E multiples. Earnings and EPS estimates have collapsed, with 2025 estimates down 55% in 6 months and no clear bottom yet in petrochemical demand. This is a risk to consider. Still, management is executing well - cutting costs, exiting underperforming assets, and prioritizing the dividend.

Initiate on LYB with a Strong Buy rating based on rapid cost savings execution and underappreciated margin normalization outlook. Valuation: 39% upside to our $78 PT on a conservative 5.9x forward EV/EBITDA multiple applied to consensus-beating estimates. Economic Earnings: We estimate LYB will generate $4.1bn of FY25E EBITDA and $4.25bn of FY26E EBITDA, both well above The street.

LYB is a compelling contrarian buy, driven by comforting free cash flow yields, even if dividend yields reduce to 6-7%. The company is transitioning from cyclical commodities to higher-margin specialty and circular solutions, supporting multiple expansion and resilient free cash flow. LYB benefits from cost advantages, local production, and investments in blue hydrogen and carbon capture, with downside risks largely priced in.

It is rare to find 9%+ yielding dividend growth stocks that would qualify as blue chips. However, today, Mr. Market is offering several of them. We share two that are attractive buys on the dip.