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More Reading from MarketBeat.com Is LyondellBasell's Nearly 10% Dividend Safe, or a Warning Sign for Investors?Reported by Leo Miller. Originally Published: 2/14/2026. 
Article Highlights - 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 is approaching or exceeding double digits, investors naturally take notice. With an indicated dividend yield of approximately 9.5%, chemical stock LyondellBasell Industries (NYSE: LYB) is worth evaluating. Very high-yielding stocks can be enticing, but they also carry important risks. Often a yield spikes because the company's share price has fallen sharply, which can signal that the underlying business is struggling. That appears to be the case for LyondellBasell: its stock is down roughly 40% over the past three years. In a difficult operating environment, a company's ability to pay dividends is under pressure. For example, basic materials and chemical company DOW (NYSE: DOW) had a dividend yield near 10% from April to mid-July 2025, then cut its dividend in half. High yields often require active monitoring rather than a "set it and forget it" approach. So, is LyondellBasell's high yield safe and sustainable? And what upside might the shares offer? LYB: Chemical Giant Operating in a Historically Weak Environment Lyondell's business converts hydrocarbon feedstocks such as ethane, propane and butane into plastic resins and other chemicals used in consumer products, packaging and auto parts. Because it produces commodity products, pricing is set by global supply and demand. Today, oversupply is pressuring prices: in 2025, margins across Lyondell's relevant businesses were approximately 45% below historical averages. That margin gap leaves room for recovery, but it also highlights current headwinds. Assessing dividend sustainability requires judging when a cyclical recovery might occur. The company expects "modest improvements" next quarter, but management says this is largely a seasonal effect rather than evidence of a broader market recovery. Questions Around Dividend Sustainability Persist In 2025, Lyondell paid $1.76 billion in dividends — roughly 2.4 times the free cash flow it generated for the year. This improved in the most recent quarter, when free cash flow of $557 million fully covered the $443 million paid in dividends. Still, the weak full-year cash generation relative to dividend payouts is concerning. The company has about $3.4 billion in cash and cash equivalents and could use those reserves to sustain payments if cash flow remains weak. At the same time, Lyondell emphasizes maintaining an investment-grade credit rating. Its net debt to EBITDA ratio now sits at 3.7x, significantly above the firm's roughly 2x average over the past decade. In short, operating profits are weak relative to debt levels. Drawing down cash to preserve a high dividend would further worsen the leverage ratio, making a sustained payout more difficult to justify. When asked about the possibility of cutting the dividend, CEO Peter Vanacker called it a "very good question." He added that the board will discuss dividend policy at its February meeting, which could be when any change is decided. LYB: Dividend at Risk as Recovery Timeline Remains Uncertain Overall, Lyondell faces a real risk of a dividend cut, though it is not guaranteed. Analysts are cautious on the stock: the MarketBeat consensus price target of $51 implies nearly 12% downside, and the average of targets updated after the Jan. 30 earnings release is even lower at $47.80. Those are 12-month targets, however, and a meaningful recovery in Lyondell's business may take longer than a year. If demand and margins normalize over the long term, the stock could recover substantially — it traded above $85 in 2022 when demand was stronger and EBITDA was near recent highs.
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