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Exclusive Content Is LyondellBasell's Nearly 10% Dividend Safe, or a Warning Sign for Investors?Author: Leo Miller. Originally Published: 2/14/2026. 
At a Glance - LyondellBasell’s nearly 10% dividend yield is attractive, but it’s elevated largely because the stock has fallen and the cycle is weak.
- Dividend coverage improved recently, yet full-year free cash flow lagged the dividend payout, keeping sustainability questions front and center.
- Leverage has risen versus historical norms, and management has signaled the dividend is under review—making policy decisions a near-term catalyst.
When a stock's dividend yield approaches or exceeds double digits, investors naturally take notice. With an indicated dividend yield of approximately 9.5%, chemical stock LyondellBasell Industries (NYSE: LYB) is worth evaluating. High yields can be tempting, but they often carry important risks. Frequently, yields spike because a company's share price has fallen sharply, which can signal underlying business weakness. I Called Black Monday. Now I'm Calling March 26!
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Today, I'll show you how to get in before the big announcement. Click Here to See How to Secure Your "SpaceX Access Code" That appears to be the case for LyondellBasell: its stock is down roughly 40% over the past three years. In a difficult operating environment, the sustainability of a dividend comes under pressure as a company's ability to generate cash is strained. For example, basic materials and chemical company DOW (NYSE: DOW) had a dividend yield near 10% from April to mid-July 2025 before the firm cut its dividend in half. That episode underscores that very high yields are not something investors can simply "set and forget." So, is LyondellBasell's sky-high yield safe and sustainable? And what upside, if any, does the stock still offer? LYB: Chemical Giant Operating in a Historically Weak Environment Lyondell's business centers on converting hydrocarbon feedstocks — ethane, propane and butane — into plastic resins and other chemicals used in consumer products, packaging and automotive parts. Because it produces commodity chemicals, prices are driven by global supply and demand. Today, the market faces oversupply, which is pressuring prices: in 2025, margins across Lyondell's relevant businesses were approximately 45% below historical averages. That gap leaves room for recovery, but it also highlights the significant headwinds the business faces. When judging dividend sustainability, the timing of a cyclical recovery is key. The company expects "modest improvements" next quarter, but management characterizes that as a seasonal dynamic rather than evidence of a broader market recovery. Questions Around Dividend Sustainability Persist In 2025, Lyondell paid out $1.76 billion in dividends — roughly 2.4 times the free cash flow it generated that year. The picture improved in the most recent quarter, when free cash flow of $557 million covered the $443 million in dividends paid. Nevertheless, weak full-year cash generation relative to a high payout raises real concerns. Lyondell has about $3.4 billion in cash and cash equivalents on its balance sheet and could use those reserves to continue dividends while cash flow is weak. At the same time, Lyondell emphasizes its desire to maintain an investment-grade credit rating. The firm's net debt-to-EBITDA ratio now sits at 3.7x, well above its roughly 2.0x average over the past decade. Put simply, the company is generating weak operating profits relative to its debt, which makes drawing down cash to fund a large dividend problematic because it would further worsen leverage. When asked about the possibility of a dividend cut, CEO Peter Vanacker called it a "very good question" and said the Board of Directors will review the firm's dividend policy at its February meeting — a potential juncture for a payout reduction. LYB: Dividend at Risk as Recovery Timeline Remains Uncertain Overall, Lyondell faces a meaningful risk of a dividend cut, though it isn't guaranteed. Analysts are not particularly optimistic on near-term upside: the MarketBeat consensus price target of $51 implies nearly 12% downside, and the average of targets updated after the company's Jan. 30 earnings release is even more bearish at $47.80. Those are 12-month targets, and a full recovery may take longer than a year. If demand and margins do rebound over the long term, however, Lyondell could see significant gains — the stock traded above $85 in 2022 when demand was strong and EBITDA was near cyclical highs.
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