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Are You Looking for a High-Growth Dividend Stock? LyondellBasell (LYB) Could Be a Great Choice
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
LyondellBasell in Focus
Headquartered in Houston, LyondellBasell (LYB - Free Report) is a Basic Materials stock that has seen a price change of -17.59% so far this year. The oil refiner and chemical company is paying out a dividend of $1.05 per share at the moment, with a dividend yield of 5.39% compared to the Chemical - Diversified industry's yield of 1.81% and the S&P 500's yield of 1.81%.
Looking at dividend growth, the company's current annualized dividend of $4.20 is up 1.2% from last year. In the past five-year period, LyondellBasell has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.38%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. LyondellBasell's current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LYB for this fiscal year. The Zacks Consensus Estimate for 2020 is $11.33 per share, with earnings expected to increase 17.78% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, LYB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Are You Looking for a High-Growth Dividend Stock? LyondellBasell (LYB) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
LyondellBasell in Focus
Headquartered in Houston, LyondellBasell (LYB - Free Report) is a Basic Materials stock that has seen a price change of -17.59% so far this year. The oil refiner and chemical company is paying out a dividend of $1.05 per share at the moment, with a dividend yield of 5.39% compared to the Chemical - Diversified industry's yield of 1.81% and the S&P 500's yield of 1.81%.
Looking at dividend growth, the company's current annualized dividend of $4.20 is up 1.2% from last year. In the past five-year period, LyondellBasell has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.38%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. LyondellBasell's current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LYB for this fiscal year. The Zacks Consensus Estimate for 2020 is $11.33 per share, with earnings expected to increase 17.78% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, LYB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).