LyondellBasell: A Contrarian's Delight in High-Yield Dividends

In a market increasingly fixated on growth at the expense of stability, LyondellBasell Industries N.V. (NYSE: LYB) stands out as a contrarian gem. With a 10.1% forward dividend yield, a 9.91% upside according to GuruFocus valuation models, and analyst forecasts suggesting a potential 24% gain, this chemicals giant offers a compelling mix of income, undervaluation, and improving fundamentals—even as near-term headwinds cloud the horizon.

The Dividend Machine: Yielding 10% with a 12-Year Streak

LyondellBasell's dividend track record is nothing short of extraordinary. The company has increased its payout every year for 12 consecutive years, with the latest hike to $1.37 per share quarterly (as of June 2025) marking a $0.03 increase over the prior quarter. This brings the annualized dividend to $5.48 per share, though analyst estimates project it could reach $5.88 by year-end, pushing the yield even higher.

The dividend's sustainability is bolstered by a payout ratio of 65%—manageable if earnings remain stable—and a history of prioritizing shareholder returns. Even during the 2020 pandemic, LYB maintained its dividend growth, a testament to its resilience. For income investors, the $57.98 stock price (as of April 2025) paired with a 10.1% yield makes LYB a rare find in today's low-interest-rate environment.

Undervalued? The Numbers Say Yes

GuruFocus assigns LYB a $64.00 intrinsic value, implying a 9.91% upside from its June 2025 price of ~$58.34. Analysts, too, are bullish: the average price target of $72.00 reflects a 24% potential gain, driven by expectations of margin expansion and cost discipline.

LYB's valuation also benefits from its $28.8 billion market cap, which remains below its peak despite outperforming peers in profitability. The company's focus on high-margin polymers—critical for packaging, construction, and renewable energy infrastructure—positions it to capitalize on global demand for sustainable materials.

Near-Term Challenges: Volatility and Technical Headwinds

Critics will point to LYB's technical weakness: a “Strong Sell” rating based on falling 20- and 60-day moving averages, and a predicted 6% drop to $56.17 by July 2025. June 2025 trading data shows significant volatility, with the stock swinging between $53.16 and $61.30—a 15% intramonth range—and closing June at $58.34, below its May highs.

The ex-dividend date on June 2, 2025, also triggered a typical price dip, with shares dropping to $54.44 after the $1.37 payout. Yet, this volatility may present a buying opportunity. High trading volumes on dates like June 3 (4.05M shares) suggest institutional confidence, even as short-term traders exit.

Why the Bulls Are Right: Contrarian Value in a Bearish Wrap

The case for LYB hinges on three factors:
1. Undervaluation: GuruFocus and analysts see LYB as trading below fair value, even after recent gains.
2. Dividend Safety: A payout ratio of 65% is sustainable for a capital-intensive firm with strong cash flows.
3. Structural Tailwinds: Demand for polymers in EV batteries, renewable energy, and circular economies is growing.

Institutional confidence is another pillar: LYB's $58.34 closing price on June 30, 2025, defied the 1-month $56.17 prediction, suggesting buyers are accumulating at dips.

The Bottom Line: A Rare Income Opportunity

For income-focused investors, LYB's 10.1% yield and 24% upside potential make it a compelling contrarian play. While near-term volatility and technical resistance are real risks, the stock's fundamentals—dividend growth, undervaluation, and sector leadership—are too strong to ignore.

Investment Recommendation: Use dips below $56.00 as entry points. With a 9.91% GuruFocus upside and a $72.00 analyst target, LYB offers asymmetric risk-reward: limited downside (supported by $54.79 in June 2025) and significant upside. Hold for at least 12–18 months to capture both dividends and valuation expansion.

In a world where yield is scarce, LyondellBasell is a dividend aristocrat in the making—a stock that rewards patience and contradicts the crowd.

Data as of June 2025. Past performance does not guarantee future results.