Argus has moved LyondellBasell from Buy to Hold, pointing to mounting concerns over the company’s ability to sustain its generous dividend. The downgrade comes after a significant stock price decline of more than 40% over the past year, reflecting broader market skepticism about the chemical giant’s earnings stability and future outlook.
💸 The company recently raised its quarterly dividend to $1.37 per share, resulting in an annual payout of $5.48 and a yield hovering near 9.7%. While this increase continues LyondellBasell’s long-standing streak of 15 consecutive years of dividend growth, it also pushes the payout ratio beyond 100%, a level that’s rarely sustainable in the long term without robust earnings support.
📊 Current earnings per share have dropped to around $4, exposing a gap between income and dividends that could force the company into tough decisions if profitability doesn’t improve. Although management has outlined a path to reduce net debt to EBITDA to approximately two times by 2026, the pressure from the dividend burden adds risk for investors who rely on consistent income streams.
🔍 The downgrade to Hold reflects the cautious stance analysts are now taking, balancing LyondellBasell’s history of shareholder returns with the growing risk that continued pressure on earnings may challenge the reliability of those dividends moving forward.