Cheap Dividend Stock: In the 19th century, every object was made with natural materials. Options were limited, and so was the amount of material available. Designers chose between stone, wood, metal, and animal products to create and build. When preferred materials weren’t available, creators had to select an alternative or do without.
In 1869, ivory was in short supply. John Wesley Hyatt decided to invent a replacement – a new material that was not at risk of becoming scarce. Through a series of experiments, Hyatt made the first plastic by treating cellulose drawn from cotton fiber with camphor.
Thirty years later, Leo Baekeland invented the first fully synthetic plastic. It was entirely artificial, and supply was virtually unlimited. His invention was marketed as a material with a thousand uses and played a crucial role in outfitting the army with equipment during World War II. The age of plastics had arrived, and in the decades that followed, plastic was integrated into almost every facet of daily life.
LyondellBasell can trace its history back to the post-war period through predecessor companies that were eventually folded into the LyondellBasell organization. Today, LyondellBasell is one of the world’s most significant chemical, plastics, and refining companies. It is both the global leader in the production of polymer compounds and the global leader in polyolefin technology licensing.
Why Did LyondellBasell Stock Go Down?
The current iteration of LyondellBasell (LYB) was founded in 2007. It is a large organization comprised of predecessor companies like Hoechst, Atlantic Richfield Company (ARCO), and Montedison. LyondellBasell began trading publicly under the new company name in 2010, and share prices have increased by more than 300 percent in the years since.
At the moment, LyondellBasell stock is trading near 52-week lows, down from its 52-week high in May 2022. The decline mirrors the movements of the S&P 500, which is reacting to a long list of larger economic issues such as rising interest rates, out-of-control inflation, and wavering consumer confidence.
Oil prices impact top and bottom-line results on LyondellBasell’s income statement because the company operates a major heavy, high-sulfur crude oil refinery in Houston, Texas. The facility processes 268,000 barrels per day to produce in-demand products such as low-sulfur diesel, reformulated gasoline, jet fuel, and heating oil.
Volatility in oil prices creates volatility for LyondellBasell, which has translated (and will continue to translate) into volatile stock prices.
Analysts are evenly split on the near-term prospects of LyondellBasell stock. The average 12-month price target is $116.00, with a high of $132.00 and a low of $91.62. However, these days investors aren’t buying LyondellBasell stock with growth in mind. It is LyondellBasell’s dividend that has truly caught their attention.
Is LYB A Dividend Stock?
LyondellBasell stock has paid regular dividends since 2011, and the amount of those dividends has increased yearly. When dividend payments started in the second quarter of 2011, the payment was ten cents per share. In the first quarter of 2022, dividends were up to $1.13 per share.
Shareholders haven’t enjoyed a special dividend from LyondellBasell in more than ten years, but on May 27, 2022, the company announced exciting news. Quarterly dividends would go up to $1.19 per share, a five percent increase quarter-over-quarter, and shareholders of record as of June 6, 2022, would also receive a special dividend totaling $5.20 per share. These developments bring LyondellBasell’s dividend yield to 5.30 percent.
The announcement came less than a week into the tenure of new LyondellBasell CEO Peter Vanacker. He explained that as the incoming CEO, he was eager to affirm his personal commitment and the company’s commitment to delivering shareholder returns.
Vanacker noted LyondellBasell’s exceptional 2021 results and said, “LyondellBasell established new records for cash generation in 2021, and we have a strong outlook for our company.” That bodes well for future dividend payments and suggests that LyondellBasell stock is a smart buy for income investors.
Is LyondellBasell Stock A Buy?
LyondellBasell might not be as exciting as a high-growth tech stock, but the company has plenty to be proud of. It is in a solid financial position despite difficult economic times, and it is doing important work in the field of plastics. LyondellBasell’s products support food safety, healthcare, access to clean water, and fuel efficiency in more than 100 global markets.
Plastics play a crucial role in day-to-day life, but that doesn’t mean they are entirely risk-free. LyondellBasell is aware of the environmental challenges presented by plastics, and it is hard at work on developing solutions for the reduction of plastic waste. The attention to finding a balance between the use of plastics and environmental responsibility has landed LyondellBasell on Fortune’s World’s Most Admired Companies list for five consecutive years.
LyondellBasell’s products’ importance in daily life, the company’s strong financials, and its above-average dividend combine to make LyondellBasell stock a buy.
But still there’s more good news for prospective investors.
Running a discounted cash flow forecast analysis reveals a massive upside potential to fair value of $148.66 per share. At the time of research, that translated to 65.7% upside, suggesting the margin of safety is significant now. With cash flows, profits and growth all receiving high marks, LYB share price has some serious upside potential from here.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.