By Paul R. La Monica
The chemicals producer LyondellBasell has a dividend yield of 10.5%, the highest of any company in the S&P 500. Investors are worried it won't last.
Shares of the maker of polymers and plastic revenue have struggled lately, falling more than 30% in the past 12 months as sales and earnings tumbled. That deteriorating performance has led to speculation that a cut to the payout could be in the cards, meaning the yield would fall, assuming the stock remained more or less stable.
The company had no comment when asked by Barron's about any potential reductions to the dividend, which it increased in May.
Still, the fundamentals for the chemicals business have only deteriorated since then. LyondellBasell rival Dow Inc. slashed its dividend in July.
Wall Street expects more dismal results when LyondellBasell reports its fourth-quarter earnings on Jan. 30. Analysts are forecasting a nearly 30% drop in sales and a more than 70% slide in net income, according to FactSet. That could put more pressure on the company to take action with the dividend.
"LyondellBasell's sharp decline was driven by a brutal cyclical downturn characterized by a global oversupply of polyethylene and stagnant demand in critical markets such as Europe and China," said Leon Gross, director of research with S3 Partners, a firm that offers analysis on short selling and market sentiment.
LyondellBasell is among the more heavily shorted companies in the chemicals sector, with about 8% of the shares being held short, according to Gross. That means some investors are borrowing the stock and selling it, with the hopes of buying it back at a lower price and pocketing the difference before returning the shares.
But stocks with high levels of short interest can also pop when short sellers rush to buy back the shares. That appears to be happening so far this year.
Shares of LyondellBasell are up more than 20% since the start of 2026, including a 7% gain on Wednesday. That made it the top-performing stock in the S&P 500 for the day. According to Dow Jones Market Data, shares are on track for their highest close since mid-September and on pace for their biggest gain since April.
LyondellBasell might be benefiting from the fact that it was such a big loser last year.
"Buying the worst-performing stocks at the end of a calendar year is a common trading strategy," said Nicholas Colas, co-founder of DataTrek Research, in a report late last month. "Investors sell such names in the final weeks of a year to harvest tax losses. Once that selling pressure abates in the new year, the stocks have an opportunity to bounce back."
Colas identified LyondellBasell as one of the 15 worst performers in the S&P 500 in 2025, which makes it a potential rebound play for this year. Dow Inc. also made the list, along with Fiserv, Deckers Outdoor, Chipotle, Conagra and Clorox.
LyondellBasell was also highlighted by Trivariate Research founder Adam Parker in a report in mid-December about high-yielding stocks. He recommended that investors buy the stock because it has reasonably steady fundamentals and a decent balance sheet. Dow Inc. and United Parcel Service made his list of high-yielding stocks worth buying too.
Still, Wall Street is almost universally bearish on the stock. A dividend cut could make matters worse because income-oriented investors who own LyondellBasell for its yield may flee if the company reduces the payout.
Only two of the 23 analysts that cover LyondellBasell recommend it as a Buy, according to FactSet. Sixteen analysts have it as a Hold and the remaining five rate the stock a Sell.
Gross noted that the company disclosed a $1.2 billion asset write-down in late 2025, leaving it with a net loss of $890 million and unleashing a wave of downgrades by analysts.
That doesn't mean that a dividend cut is imminent. But unless financial conditions improve sometime soon, Wall Street could put pressure on the company to conserve its cash. One way to do so would be to scale back the payout.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
January 14, 2026 14:52 ET (19:52 GMT)
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