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The S&P 500 doesn’t have a reputation for being stuffed full of dividend stocks. Indeed, the index as a whole is presently (19 December) offering a yield of 1.21%. Compare this to, for example, the FTSE 100‘s 3.16% and you can see why income investors are more likely to consider buying shares closer to home.
But there’s one US stock which, based on amounts paid over the past 12 months, is currently yielding 12.5%. Lyondellbasell Industries (NYSE:LYB) isn’t a household name on this side of the Atlantic but the chemical company has established a reputation for being one of the most reliable dividend payers around.
Since 2015, it’s increased its payout every year. In cash terms, it’s now 64% higher than it was 10 years ago. As the table below shows, over the past decade, the stock’s always offered a reasonable yield.
| Year | Dividend per share ($) | Dividend change (%) | Share price ($) | Yield (%) |
|---|---|---|---|---|
| 2016 | 3.33 | +9.5 | 81.91 | 4.1 |
| 2017 | 3.55 | +6.6 | 105.34 | 3.4 |
| 2018 | 4.00 | +12.7 | 79.41 | 5.0 |
| 2019 | 4.15 | +3.8 | 89.84 | 4.6 |
| 2020 | 4.20 | +1.2 | 86.96 | 4.8 |
| 2021 | 4.44 | +5.7 | 88.07 | 5.1 |
| 2022 | 4.70 | +5.9 | 83.03 | 5.7 |
| 2023 | 4.94 | +5.1 | 95.08 | 5.2 |
| 2024 | 5.27 | +6.7 | 74.27 | 7.1 |
| 2025 (at 19.12.25) | 5.45 | +34 | 43.76 | 12.5 |
From 2016-2023, at the end of each year it was in a range of 3.4%-5.7%. But in 2023, the company’s share price started to fall. This pushed its yield higher still. Now, it’s the highest on the index. But is this a cause for concern rather than something to get excited about? Let’s try and find out.
Delving deeper
Lyondellbasell has been in business for over 70 years and sells itself as “one of the world’s largest producers of polymers and a leader in polyolefin technologies”. Its products are used in a wide variety of applications including the car industry (to help improve fuel efficiency), food manufacturing (packaging), and paint.
But there’s an over-supply of polyolefin at the moment, which is putting pressure on prices. When reporting its third quarter results this year, the group revealed a $1.2bn write down in the value of some of its European businesses due to “the prolonged downturn in the European petrochemical and global automotive industries”.
As you’d expect, to help preserve cash, the company’s been cutting costs, delayed some of its larger capital projects, and is looking to sell some of its under-performing assets.
However, despite this, it looks to me as though the long-term fundamentals of the markets in which it operates are strong. High-performance polymers will be needed to support the anticipated growth in renewable energy projects and data centres. Electric vehicles use 10% more plastic by weight than those powered by internal combustion engines.
Encouragingly, there are early signs that demand could be picking up. In North America and Europe, 2025 demand for polyethylene was at its highest since the start of the downturn in 2022. And due to its strong balance sheet, Lyondellbasell has the financial firepower to be able to wait for a recovery. This also means it’s in a good position to capitalise should the plastics market recover as anticipated.
Of course, there are no guarantees here. And uncertainties over US trade policy could also throw a spanner in the works.
But on balance, despite the industry risks, I think Lyondellbasell Industries is a stock deserving consideration at least. Even if it had to cut its dividend substantially while waiting for a recovery in global markets, its yield would still be far higher than the majority of its S&P 500 peers.
