From 24/7 Wall St. · Chris Lange · · 1m 50s
Chemical Giants Cut Dividends, One Raises
Two chemical companies cut dividends while one keeps raising, and income investors must know why.
In brief
Two chemical companies cut dividends while one keeps raising, and income investors must know why. Dow and LyondellBasell cut dividends after years of growth, while Air Products raised its payout due to stable cash flow from industrial gases. Originally reported by 24/7 Wall St..
Dow Cuts Dividend
Dow reduced its quarterly dividend from $0.70 to $0.35 after six years of payments.
Dow Dividend Safety
Dow's free cash flow covers its dividend 2.6 times in the first half of the year.
Dow's Financial Health
Dow has $14 billion in liquidity and no debt due before 2029, with $3.97 billion in cash.
LyondellBasell Cuts Dividend
LyondellBasell reduced its quarterly dividend from $1.37 to $0.69 after years of growth.
LyondellBasell Dividend Safety
LyondellBasell's free cash flow covered its dividend 2.15 times in Q2 but was negative in Q1.
Air Products Raises Dividend
Air Products increased its quarterly dividend from $1.79 to $1.81, maintaining a 20-year raise streak.
Why Dividends Differ
Dow and LyondellBasell sell commodity chemicals with volatile prices, while Air Products supplies industrial gases under long-term contracts.
Air Products' Cash Flow
Air Products has a 25.6% adjusted operating margin and free cash flow positive year to date.
Key Risk for Dow
Dow's third-quarter EBITDA is expected to drop from $2.3 billion to $1.7 billion, and cash coverage may weaken.
Key Risk for LyondellBasell
LyondellBasell's production was disrupted by the Middle East conflict, reducing operating rates to 95%.
Key Risk for Air Products
Air Products incurred $2.9 billion in pre-tax charges from clean-energy projects, impacting quarterly earnings.
What Investors Should Watch
Dow and LyondellBasell need stable cash flow to maintain dividends, while Air Products' raises depend on electronics backlog growth.
The essence
Dow and LyondellBasell cut dividends after years of growth, while Air Products raised its payout due to stable cash flow from industrial gases.
