LyondellBasell Industries (NYSE: LYB) offers an indicated dividend yield of approximately 9.5%, catching the eye of investors. However, high yields can signal struggling businesses, as seen with a 40% stock price drop in the past three years for LYB and DOW cutting its dividend in half after a similar situation.

LyondellBasell’s business is facing challenges with margins 45% below historical averages due to oversupply in the chemical market. While the company expects modest improvements in the next quarter, the overall recovery timeline remains uncertain, impacting the sustainability of its high dividend yield.

In 2025, Lyondell paid out dividends significantly higher than its free cash flow, raising concerns about sustainability. The company’s low cash generation compared to its dividend payout and high debt levels indicate a risk of dividend cuts in the future.

CEO Peter Vanacker hinted at a potential discussion on the company’s dividend policy in February, possibly leading to a dividend reduction. Analysts forecast a downside in shares for LYB, indicating limited appreciation upside in the short term despite potential long-term gains if a recovery occurs.

Read more at Nasdaq, Inc.: Is LyondellBasell’s Nearly 10% Dividend Safe, or a Warning Sign for Investors?