We recently compiled a list of the Dividend Contenders List: Top 15.In this article, we are going to take a look at where LyondellBasell Industries N.V. (NYSE:LYB) stands against the other dividend contenders.
Dividend stocks have long been favored by investors for the income they generate, and they become even more appealing when dividends increase over time. Investors frequently seek out companies with a strong history of raising their dividends, as this growth boosts their income over the long term. Sustaining long-term dividend growth is challenging. For instance, "dividend aristocrats" are companies that have grown their dividends consistently for at least 25 years, and only about 68 US companies have been successful in achieving this. This demonstrates how difficult it is to attain such a high standard. However, many companies still manage to build shorter dividend growth histories, showcasing their resilience and potential to reach even greater milestones over time. Dividend contenders are well-regarded for having raised their dividends for 10 straight years, though they have yet to reach the 25-year mark needed to be considered long-term dividend growers.
Investors are drawn to dividend growth stocks, as these stocks have shown strong performance over the years. Data from Ned Davis Research covering the past 50 years revealed that high-quality companies that initiate and increase dividends have delivered higher returns and lower volatility than an equal-weighted index. By holding a portfolio of dividend growth stocks, investors can potentially achieve not only favorable risk-adjusted returns but also a more stable investment experience—one less impacted by the risks of market timing, which can reduce long-term gains. This strategy can help investors build wealth steadily over time, contributing to a more secure financial future.
Recently, tech stocks have surged to the forefront, and investors are capitalizing on this momentum, temporarily overshadowing dividend stocks. However, this shift doesn't imply a dim outlook for dividend stocks. Over the long term, dividend growth stocks have consistently demonstrated their strength and reliability. According to a report by Nuveen, companies that consistently grow or start paying dividends have delivered higher annualized returns with less volatility compared to other parts of the equity market. Although these dividend growth stocks don't outperform in every market condition, their solid risk-adjusted returns over extended periods make them a strong foundation for an equity portfolio.
Michael Clarfeld, manager of the Dividend Strategy portfolios at ClearBridge Investments, supports investing in dividend stocks. Clarfeld emphasizes the value of long-term compounding, viewing dividend stocks as essential for a well-rounded portfolio. He advocates for a dividend growth approach, focusing on companies capable of steadily increasing their dividends over time. Instead of chasing high yields for immediate gains, he advises investors to consider total return, which includes the reinvestment of dividends. In an interview with Morningstar, he noted that the average company in his portfolios has compounded dividends at around 9% annually, meaning an investor's income could potentially double every eight years. Clarfeld further said that dividend investing centers on evaluating a company’s cash flows and how they allocate payouts to investors.
In this dividend contenders list, we will take a look at companies that have raised their payouts for at least 10 consecutive years.
Our Methodology:
This list focuses on dividend contenders—companies known for raising their dividends consistently for 10 years but less than 25. From this group, we selected those with the highest dividend yields as of November 11, ranked from lowest to highest yield.
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A factory worker monitoring a conveyor belt of specialty chemicals being produced.
LyondellBasell Industries N.V. (NYSE:LYB) is a Netherland-based multinational chemical company that specializes in plastics, chemicals, and refining. In the most recent quarter, the company commenced construction on its new MoReTec-1 facility in Germany, representing a key step forward in its commitment to a more sustainable future. This investment highlights LYB's dedicated efforts to lead the industry in transitioning to a circular economy.
Despite difficult global macroeconomic conditions, LyondellBasell Industries N.V. (NYSE:LYB)'s robust North American operations enabled it to take advantage of favorable ethylene margins in the region. Through September, year-to-date demand in North America's polyethylene and polypropylene sectors rose over 7% and 4%, respectively, compared to 2023. In the third quarter, the company’s volumes were bolstered by high operating rates at its crackers, which helped capture increased margins from merchant ethylene sales. Its revenue for the quarter came in at $10.32 billion, down 2.8% from the same period last year.
LyondellBasell Industries N.V. (NYSE:LYB) has consistently been a popular choice for dividend-focused investors. Its strong cash position has enabled substantial dividend distributions. In the third quarter of 2024, the company returned $479 million to shareholders through dividends and share repurchases. In addition, it generated $670 million in operating cash flow in Q3.
LyondellBasell Industries N.V. (NYSE:LYB) offers a quarterly dividend of $1.34 per share, growing it by 7.2% in May this year. This was the company's 14th consecutive year of dividend growth. Its 5-year average annual dividend growth rate comes in at 4.79%. With a dividend yield of 6.31%, LYB is one of the best stocks on our dividend contenders list.
Overall LYB ranks 5th on our list of the top dividend contenders. While we acknowledge the potential of LYB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LYB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
